Contactless spending is expected to account for almost half of all transactions by the end of 2022 (47%), as it becomes the most popular payment method for the first time, according to new research.
The VoucherCodes.co.uk Life after Covid: Prospects for online retailing, physical stores and how we pay report, carried out by the Centre of Retail Research (CRR), examined the pandemic’s effect on the way UK shoppers pay for goods.
The study shows that pre-pandemic in 2020, chip and pin was the most popular payment method, accounting for over a third (37%) of all transactions in the UK. During the same period, only 17% of all payments made were contactless. However, between 2021-2022, chip & pin payments are forecast to decline to just 25% of all purchases and cash payments will see a sharp decline, accounting for just over a tenth (11%) of all payments by the end of 2022.
The switch, which will constitute a 30% increase in contactless payments from pre-pandemic to the end of 2022, was accelerated by changing consumer and retailer behaviour when it comes to paying for goods during Covid-19. Shoppers swapped cash for card for hygiene reasons, many retailers also stopped accepting cash altogether, and the contactless payment limit increased from £30 to £45.
Anita Naik, Lifestyle Editor at VoucherCodes.co.uk, said: “Covid-19 has forever changed the way consumers spend their money. With exponential increases in online orders during the pandemic, combined with increased contactless limits and retailers implementing cash bans, people have quickly adapted to relying on contactless payments for the bulk of purchases as a result.
“It remains to be seen whether the government will amend laws relating to legal tender, enabling retailers to permanently refuse to accept cash if they wish.
“Ultimately, only time will tell, but in the immediate future, whereby cash was once key, contactless is our future.”
Robin Gareiss, Metrigy CEO, added: “I don’t really see much of an impact on CX overall as consumers move toward contactless transactions. It had been coming prior to COVID-19, and it accelerated after that for obvious reasons.
“It may reduce a few seconds off a transaction, but otherwise, it’s simply a different, yet similar, way of processing a credit card transaction. I do have a concern with companies that refuse cash because it’s not good business practice to reduce customer choice. Many people prefer to pay in cash, so companies that refuse it will also lose business.”
Looking ahead to next year, card payments are expected to account for almost three quarters (72%) of all transactions.
