The way we pay has been markedly changed by the COVID-19 pandemic, with the rapid evolution of payments technology and preferences during 2020 smashing all projections.
The 2021 Global Payments Report by fintech company FIS Global predicts that Australia will be mostly cashless by 2024. Their research suggests that by then, just 2% of transactions will be cash transactions – compared with 8% of transactions in 2020.
With Australian consumers increasingly preferring to use electronic payment methods, many businesses are considering a cashless future. Concerns about COVID-19 transmission mean that many of us avoid handling cash when shopping unless we have to, and organisations are seeking to minimise the use of cash to protect their employees.
So, with cashless fast becoming the preferred payment method for both consumers and the businesses that serve them, what should forward-thinking organisations consider when planning for a predominantly cashless future?
Mobile wallets are exploding in popularity
A mobile wallet is essentially a digital wallet on your phone. It lets you securely store the details associated with your debit and credit cards, so you can use your phone rather than a physical card to make purchases.
Worldwide, the use of mobile wallets rose from 19.5% of all point of sale (POS) transactions in 2019 to 25.7% of POS transactions in 2020. The FIS Global report projects that mobile wallets will account for more than one in three POS transactions by 2024, making them the dominant payment method worldwide.
Your organisation should absolutely be equipped to accept payment via mobile wallet. However, payment preferences vary significantly by location and geography, so ensure your payment partners support the mobile wallets your customers are using.
Widespread digital payments support better business intelligence
If you’re capturing most transactions electronically, you’ll have access to rich data about your customers and business performance. Digital payment data gives you valuable insight into how much your customers are spending, what they’re buying, how often they’re buying, and more. It will also help you to make data-driven decisions about optimising your operations and driving growth.
Payment security has never been more critical
Cashless payment surged in popularity when consumers became more concerned about health and hygiene than they were about security and data protection. While fear of COVID-19 transmission is an ongoing concern, the shift to digital payments and services has meant that cyber threats are becoming increasingly common – and creative. To protect your organisation, you should partner with a known and trusted payments provider who offers PCI DSS compliance.
Cashless is safer and more efficient
Cashless payments provide a faster and more convenient customer experience and allow your organisation to serve more customers. A cashless operating model is also safer for employees and customers – keeping less cash on hand reduces the risk of theft and means fewer trips to the bank to make deposits or withdrawals.
Cash is unlikely to disappear altogether
The Reserve Bank of Australia governor, Philip Lowe, suggests that while cash is likely to become rarer, it’s still an important emergency payment method. So, while it’s sensible to plan for a future where cash plays only a small role, your business should continue to accept cash payments on a discretionary basis for the foreseeable future.
With digital payments on a steep upward trajectory and COVID-19 continuing to drive concerns about cash, it makes sense to explore the opportunities and threats associated with cashless operation.
At Xetta, we continue to work with our customers and partners to leverage emerging trends and technologies to help them build future-focused, agile organisations.