February 23, 2024

As more and more consumers of all generations use some form of digital payment to check out, the reliance on cash is gradually decreasing. Over the past few months, there have been many innovations in contactless payments – across industries and countries – and these innovations will only continue to evolve. But don’t expect a completely cashless society. Consumers may be pulling out their mobile devices more to tap and pay, but they’re still pocketing.

Digital Transformation…

A major driver of digital payment usage can be attributed to the pandemic. Consumer behavior has changed due to shelter-in-place orders and concerns about cash hygiene. Even older consumers, long reluctant to adopt new payment methods, are embracing the new normal.

Merchants took notice and quickly adapted to ensure consumers had a seamless shopping experience no matter which payment method they chose.

And the choices continue to grow. Consumers can now pay with cash, credit cards, debit cards, digital wallets, tapping their phones or smart watches, passing QR codes, scanning their faces and, more recently, the palm of their hand.

The expansion of the variety of payment methods available shows just how much the digital payments landscape is changing, and what the next few years may look like. Take Amazon One, for example. In March, Panera Bread signed on as the first restaurant to take advantage of the e-commerce giant’s computer vision technology, which encourages shoppers to pay for items by scanning their palms after logging into their Amazon One profiles. More retailers, including Whole Foods Market and Starbucks, are experimenting with biometric payment systems and figuring out whether scanning their palms at self-checkout kiosks will be more popular with consumers than paying at traditional cash registers.

Contactless payments are becoming a way of life. Beyond retail, consumers can tap their phones at ATMs to quickly access their accounts and deposit and withdraw money. And there is a growing trend in transportation systems, with more and more countries and cities installing contactless fare payment systems, offering consumers a more flexible way to pay for their subway or bus fares.

…but not yet fully digital

If it weren’t for the pandemic, advances in contactless payments might not have happened as quickly as they are now. But while consumer acceptance of digital payments has indeed changed significantly, there is still some way to go before we fully enter this Jetsons era.

For one thing, the negative perception of contactless payments persists: Once you go to checkout, some things don’t work. Who wants to hold up a line or wave their palms endlessly? To avoid any potential trouble, some consumers just stick to what they know. Merchants play a key role in the continued acceptance of contactless payments. They need to make sure they are taking the necessary steps to ensure their payment operations are ready to process any type of transaction.

The state of the economy can also affect how consumers, especially young people, shop for goods. Many people are watching their spending and avoiding credit or debit cards in case they spend more than they can. research conducted Late last year, Credello found that Gen Zers have been “stuffing cash” as a way to budget and better manage spending.

It all comes down to convenience. If we look at the progress that has been made, there will no doubt be continued leaps and bounds, especially with the additional involvement of retailers and brands as well as governments, as we have seen in the transport sector.

Cash is still king in some places, though that’s changing

Cash is still very important in many parts of the world. But interestingly, the shift continues to happen, even in cash-crazy countries like Japan and Greece. We recently reported on the influx of payment options available in Japan, and how more and more consumers in the country are relying on these options instead of paying with cash.

Japan has certainly noticed this change and is moving towards it. Last month, Japan’s finance ministry said it planned to launch a pilot program and test a digital yen. Not to mention Japan’s Yahoo! Mart has launched a self-service point-of-sale system that lets consumers pay by facial recognition. When Japan hosts the 2025 World Expo, which will be held in Osaka, the event will be completely cashless – a first for any world expo.

These incremental advances and efforts did not happen overnight, and as mentioned earlier, there are still many opportunities in the payment space to make contactless and digital payments more seamless and flexible, making consumers more willing to pay in this way. Especially since it’s something they’ve wanted for a while. Until then, consumers will continue to have a range of options to choose from – whether in the form of cash or digital payments.