The 2020s: how the way we pay will change forever
Undeniably, 2020 was a big year for payments. Despite, or rather because of the past 12 months, the way we pay for everything from food shopping to clothes and essentials has changed significantly. The drive to halt the spread of the virus has seen the volume of digital payments increase exponentially. With 80% of consumers reporting they have made more contactless payments than ever, and nearly a quarter (24%) of these consumers making more use of their mobile wallets.
In the midst of another national lockdown in the UK (currently underway in January at the time of writing), and more on the horizon across Europe, it’s clear the move to contactless and contact-free is well and truly underway. But looking further than the next 12 months, 2020 set in motion a number of other payments trends that we will likely see come to fruition by the end of the decade
Contact-free will replace contactless
Consumers started to move from contactless to contact-free in 2020. Eschewing physical form factors such as cash and plastic in favour of mobile-based payments when allowed out and about, and opting to shop online from the comfort and safety of their home wherever possible during the first, strictest lockdown.
With Strong Customer Authentication (SCA) now in place across Europe, and mandated for the UK by 14 September 2021, we will start to see even more consumers become at ease with using their mobiles while making payments. Under SCA, consumers are required to authenticate themselves via codes sent as text messages, extending the consumer/mobile bond into a myriad of purchasing experiences, paving the way for enhanced customer experiences with user friendly biometrics offered through bank and mobile wallet providers, thus replacing the text message stepping stone.
While text message codes are a definite step in the right direction, this extra layer of friction could at first seem clunky to some. Though to others, having some security friction will be most welcome amidst increasing financial crime. This confrontation between convenience and security is age-old in payments, and banks should move to iron out the kinks in their customer journeys to enable faster adoption. A key example here is Request 2 Pay (R2P), launching across Europe now, ushering in contact-free payments which we will see become the norm by the end of the decade.
Real-time payments will become standard
The events of 2020 shone a light on how having instant payments and access to cash is no longer a nice to have, but a necessity. While banks have been investing heavily in access to real-time payment rails across Europe for a number of years, the critical task for this decade will be how they embed instant payments into the consumer journey.
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