Global consumer trends – Focus on payments industry

A new global consumer trends report, Global Consumer Trends – The New Normal, has been released which documents how consumer preferences across a range of activities has changed. From Work, Play, Medicine and of course Payments, Dynata conducted 11,322 interviews looking at the changing behaviour and values of consumers across  11 countries, approximately 1,000 interviews per country.

Perhaps surprisingly, payment methods, before the pandemic, were very different across countries. Even within the EU, and between the USA and Canada, we see major differences.

Within the six countries of the EU in our study, around one in ten in both Germany (11{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) and Italy (13{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) had no “plastic” (and no phone app) to make payment with. This was double the number seen in the UK, France, the Netherlands and Spain – and similar to the US (10{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}). Canada was more like Europe at 3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, than its near neighbour. Asia-Pacific, or at least China, Australia and Singapore, tended to be like Europe.

Also, the types of cards held – contactless, “chip and PIN” and “chip and signature” – were different across countries. The highest level of contactless card or phone app ownership was seen in China, where 90{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} report having at least one and 84{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} having a phone app; followed by Singapore (85{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} having some form of contactless card or phone app ownership); the UK (81{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}); and Australia (78{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}). In the USA, by contrast, only four in ten had contactless methods of payment before the pandemic.

Where people had a contactless method, it was popular. Around half of Canadians, Britons, Australians, French, Dutch and Singaporeans indicated their favourite method was their contactless card. In China, 78{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} chose their contactless phone app as their favourite. Germany, in stark contrast, strongly identified as a cash economy with as many as 43{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} citing cash as their preferred method of payment, pre-COVID-19.

Since the COVID-19 outbreak we have all been advised, wherever possible, to use cards rather than cash, and contactless rather than chip and PIN or chip and signature. The past few months have seen an increase in the availability of contactless methods. The biggest growth has been seen in the USA, moving from 38{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to 46{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} ownership of a contactless method of payment.

The preference for cash has fallen away faster than contactless methods have grown. Prior to the pandemic, 22{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} of respondents across all countries expressed a preference for cash. This has now dropped seven points to 15{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. The largest fall is seen in Germany, who reported the most reliance on cash, dropping from 43{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} to a 33{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} preference for cash. In Italy and Spain, we also see large drops in cash as the preferred method of payment, down 10 and 13 points, respectively.

Looked at as percentage change rather than an absolute change, the biggest movement away from cash occurred in Spain, decreasing from 29{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} preferring cash to 17{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} – a reduction of 43{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}. Similar large shifts were seen in the UK (-42{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}), China (-40{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}), Canada (-40{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) and the Netherlands (-38{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}). In the USA, by contrast, the preference for cash remains essentially fixed at around 15{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}.

The pandemic is not yet over, and there is a continuing movement toward contactless cards and apps. Of the quarter of the population who have no contactless ability right now, around a third of them say it is extremely or very likely that they will get one soon. For a small minority (3{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) it is certain, and the card is already ordered.

A persistent cohort of around three in 10 respondents who currently don’t have a contactless method say it is not at all likely that they will go contactless. This equates to about just under one in ten of the population (8{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) on average. By country this varies from a mere 1{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f} in China, to Singapore, the UK, Canada, France, Australia and the Netherlands all being under 10{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}, to the highs in Germany (16{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}) and the USA (19{3c4481f38fc19dde56b7b1f4329b509c88239ba5565146922180ec5012de023f}).

It appears the pandemic will have accelerated the movement from cash to plastic and from PIN or signature plastic to contactless methods, whether via cards or smartphone apps. It seems unlikely that contactless behaviours learned or reinforced during the pandemic will be abandoned after it is over.

The example of countries that are well “ahead” in the move to contactless demonstrates how simple, convenient and easy it is to pay by card rather than cash. It is also more secure for the retailer, even for mundane and low value activities such as buying a drink in a bar or a loaf of bread at a bakery.