Why Cashless Payments are the Present, Not the Future
In the past decade, consumers have abandoned cash in favor of digital alternatives, using smartphones for every day touchpoints from shopping to banking and making real-time transactions. With more cashless consumers transitioning to mobile devices to make purchases, it’s clear this trend shows no signs of slowing, especially as we have already discovered during this holiday season.
Savvy consumers are constantly searching for easier ways to transact, and convenience weighs heavy when embarking on the shopping to purchase experience. Online merchants who offer multiple methods of payment options are more likely to convert on sales this holiday season.
The shift to a cashless society is imminent, and we have the mobile generation of millennials and Gen Z’s dubbed as those ‘transforming the way we bank’ to thank for that. Members of Generation Z (those born roughly between 1996 and 2010) have never known life without technology—they live through their mobile devices, and they’re a fast-growing consumer segment. In fact, within the next four years, Gen Z will account for 40 percent of all consumers, and their expectations for fast, seamless and secure payment experiences will be higher than ever.
Without a doubt, having a mobile-first solution will be even more critical in 2019 should online retailers and banking institutions desire to compete in a global market. Globally, consumers are using mobile devices more than ever before and because of this, merchants should always look to accommodate the payment needs of their consumer base. Mobile friendly payment options must be offered to capitalize on a growing sales opportunity.
Cashless is King – Even Outside The Online Retail Experience
Beyond the conversion to mobile-first banking experiences, we are even seeing charities changing their approach to collecting donations. The Salvation Army’s Red Kettle Campaign, for example, is a long-time holiday goodwill that has taken a hit in recent years due to our move to a more cashless society. The truth is, consumers are not giving less, but rather are not as likely to carry spare change and loose bills to donate. In response to this change, the charity kicked off the holiday season by offering digital payments through QR codes, allowing consumers to donate with their smartphones.
This transition to fit the payments needs of a changing consumer base is the same mindset that retailers should look to adopt. If non-profits are adjusting to the way consumers prefer to give back, online merchants should follow suit. Consumers are seeking simpler ways to complete a transaction and for e-commerce, this means offering more than just credit cards as a payment option. The rise in mobile usage is evidenced by the fact that the United States has a smartphone penetration of 82 percent; globally, that figure rests at 53 percent.
While the use of credit cards, debit cards and other digital payment systems are currently most popular in the U.S., only 41 percent of online credit card transactions are made worldwide, proving there are many more alternatives to pay in the global landscape.
For example, recent PPRO research indicates 23% of payments made in the United States are by e-wallets and as the digital payments industry grows, widely used local payment methods like e-wallets and bank transfers will become even more well-known. Local payment methods (also referred to as LPMs) are those means of payment outside of traditional credit cards that facilitate the needs of different geographies, cultures and domestic markets around the world.
From a worldly perspective, we should also consider that the rise in many different payment types isn’t just an American trend. Many global regions prioritize mobile payments and have been doing so for quite some time. For example, in Germany, the preferred payment method is bank transfer which makes up 49% of all online transactions. For comparison, credit cards only make up 11% of these transactions, further proving the global transition away from a cashless society is closer than we think.
The ubiquity of digital alternative payments can be seen in China as well. 49% of online transactions here are done by e-wallets. Different global regions have different preferred payment methods, yet they all share one commonality. There is a need to offer many different payment options.
At the change in pace which consumers are favoring digital alternatives over cash when making purchases, it’s apparent that ‘cashless’ will soon be king. Having a mobile-first solution – from charities and retailers alike – will be even more high-priority in 2019.
Steve Villegas – Vice President of Partner Management at PPRO: A Sales, Marketing and Business Development Executive with over 20 years of experience building and managing sales, partner development and marketing teams which have delivered profitable results, built market share, and exceeded revenue goals while outperforming competition. A natural communicator and team leader with strong motivational skills, with the ability to build, produce and succeed.