In 2020, e-commerce spending grew at the fastest rate in five years, while usage of cash for in-store payments fell sharply, as people around the world made increasing use of mobile wallets and other alternative payment methods in 2020 during the pandemic, according to report released by financial technology firm FIS.
The annual Global Payments Report by Worldpay from FIS examines current and future payment trends across 41 countries. Findings from the 2021 report show that lockdowns, shelter-in-place orders and personal safety measures during the global health crisis accelerated the shift toward digital payment methods in every area of spending.
In-store payment trends
The FIS report found that, globally, use of mobile wallets exceeded cash for the first time for in-store payments. Cash usage dropped 10 percentage points in 2020 to account for just one-fifth of all face-to-face payments worldwide.
Use of cash for in-store payments fell by half or more in Canada, the UK, France, Norway, Sweden, and Australia. Cash payments in the US made up US$1 trillion of in store payments in 2020, down from US$1.4 trillion in 2019.
The Asia-Pacific region continues to lead in the use of mobile wallets at point-of-sale, with about 40% of in-store payments in that region now being done through contactless payments. However, use of mobile wallets accelerated across all regions in 2020 and now accounts for about 10% of payment methods in North America, 8% in Middle-East-Africa, 7% in Europe, and 6% in Latin America.
The report projects that, by 2024, cash will account for less than 10% of in-store payments in the US and just 13% of payments worldwide. Over that same time period, the report projects digital wallet payments to account for more than a third (33%) of all in-store payments (16% in the US).
E-commerce spending accelerated in 2020 during the pandemic. The FIS report found that total e-commerce spending grew globally 19% last year to US$4.6 trillion in value. That growth was the highest in the past five years and represented two-to-three years of typical acceleration in a single year. Analysis shows global e-commerce spending could grow to US$7.3 trillion by 2024.
Globally, usage of digital wallet-based transactions in 2020 grew 7%. By 2024, the report projects that digital wallets will account for more than half of all e-commerce payments worldwide.
The reports shows that the adoption of buy-now-pay-later transaction methods continues to rise rapidly in Europe and North America and is expected to double by 2024. Conversely, usage of traditional payment methods such as cards and cash-on-delivery are quickly losing share and expected to account for less than 40% of e-commerce transaction payment methods by 2024.
“Our new research shows that the world is entering a new phase of adoption of digital payment methods,” said Jim Johnson, head of Merchant Solutions at FIS. “The global pandemic has brought a cashless future closer on the horizon. The implications for merchants are profound. They must be building technology-centric strategies to meet the diverse preferences of consumers’ rapidly changing habits and do so in a way that drives financial inclusion for underserved communities around the world. For those businesses that are savvy enough to embrace smarter commerce and invest, the growth opportunities will be huge and potentially game-changing.”
About The Global Payments Report
Figures quoted are taken from data published in The 2021 Global Payments Report by Worldpay from FIS unless otherwise stated or referenced. This data was collected using consumer surveys, B2B surveys and input from local research teams. 46,000 consumers were surveyed globally. Digital wallets are comprised of mobile wallets such as Apple Pay, Google Pay and Samsung Pay that work only within a specific mobile operating system as well as digital wallets such as Alipay, WeChat Pay, Paytm and Amazon Pay that are operating system-agnostic.
Like this item? Get our Weekly Update newsletter. Subscribe today