Technology has progressed rapidly over the past decade, changing both the ways in which we interact socially, and how we conduct our financial transactions. Far more payments are made online, via debit and credit cards, or via non-traditional payment services such as PayPal, while it’s becoming more and more unusual to pay for something by writing a cheque. It seems reasonable to assume that the pace of change is unlikely to slow down, so what can we expect to see in the next decade?
Fewer Cash Transactions
One of the biggest changes will be the continued move towards a cashless system. While cash remained the single most popular payment method in 2015, it was used for less than half of all payments for the first time ever. With the emergence of new technologies, this trend is expected to continue and it’s estimated that by 2025 cash will be used in just 27% of all transactions.
Fewer Cheque Payments
Once the king of payment methods, cheque usage has fallen off in recent years, having declined by 13% between 2014 and 2015 alone. This rapid decline is expected to continue. That said, cheques are still a convenient and secure method of making – or receiving – payments; but while some 546 million cheques were written in 2015, a mere 237 million cheques are forecast to be used in 2025.
Direct Debits Remain Popular
Direct Debits look set to retain their popularity due to the convenience and security of using them to pay regular bills. Traditionally, they’ve been favoured more as a payment method by consumers than businesses, but DD has grown in popularity within the B2B community in recent years. Direct Ddebit is so well established that consumer market growth tends to be driven by changes in population, whereas business growth is largely attributed to an increase in uptake. An increase is forecast, from 3.9 billion transactions in 2015 to 4.3 billion by 2025.
Increased Reliance on Debit and Credit Cards
Card payments continue to grow in popularity, this trend being largely responsible for the reduction in the use of cash. Debit card payments are forecast to overtake cash payments in 2021, with contactless payments set to be one of the driving forces in their increased usage. Contactless technology is likely to mean cards are used for the sorts of lower-value purchases that previously would have been made using cash. Whereas the average adult made 19 card payments per month in 2015, they are forecast to make 30 card payments per month in 2025.
An Increase in Contactless Payments
Contactless payment systems use radio-frequency identification (RFID) or near-field communication (NFC) systems to allow people to make secure payments simply by waving their enabled card or device over a reader. The technology is already growing in popularity – more than three times as many contactless payments were made in 2015 than in 2014, and at the end of 2015 around half of cards had the functionality. The convenience of not having to sign or enter a PIN is attractive, especially for small purchases or when someone is pressed for time. Services, such as Apple Pay, are bound to be welcomed by people who rarely have their phone out of their hand, but would have to rummage for a card. We’d love to get your thoughts on how you think consumer/business payment culture might change over the next 10 years, so please send us a tweet or leave a comment on LinkedIn. If you’d like to discuss a Direct Debit or card payment gateway solution, please get in touch with our expert consultants today.