Covid key as shoppers embrace next generation payment methods

With a Covid pandemic accelerated adoption of digital wallets and growing demand for services such as buy now pay later, a robust digital identity and infrastructure will become key in remaining competitive within this new era for payments.

That’s according to Capgemini’s 2022 Top Trends in Payments Report.

“Still reverberating from the impact of the pandemic, 2021 was a year of transition as we moved toward the new Payments 4.X era,” the report states.

It adds: “Yes, the industry is undergoing a facelift, sparked by novel approaches from new age players and fostered by industry consolidation and demand for embedded experiences.”

“As customers embrace next-gen payment methods, non-cash transaction volumes rally as the payments instrument mix drifts to digital. What’s more, authentication was − and will continue to be − critical in virtual scenarios, which makes digital ID infrastructure a top of mind topic.”

The traditional mix (cash, cheques, direct debits, and credit transfers) is morphing into a new instrument mix gravitating toward digital payments.

Traditional instruments’ share of the market is either stagnant (cards) or diminishing (cash).

Digital wallets are expected to overtake cash and card as the most popular in-store payment method. They are gaining significant traction through their easy, convenient, and fast payment capabilities. 

The number of mobile wallets in use is on track to reach 4.8 billion by 2025 (up from 2.8 billion in 2020 – nearly 60% of the world’s population.)

Globally, contactless in-store payments via mobile wallet exceeded in-store cash and card payments for the first time in 2020. And by 2024, digital wallets will account for one in three in-store transactions globally.

By 2024, Capgemini expects cash to account for less than 10% of in-store payments in the US and 13% of global payments.