News & Views - Savantor

COVID-19 - acceleration of trends in consumer behaviour

Friday, 16 October 2020

The recently issued Capgemini World Payments Report 2020 has underlined the continued migration from use of cash towards digital methods of payments, hastened even more by the circumstances caused by the COVID-19 pandemic. 

The findings of the report identify how non-traditional payment service providers are becoming more popular, with 30% of consumers choosing to use a ‘Big Tech’ company for payment services and 50% opting to use a challenger bank for payments. In addition, 38% of consumers apparently discovered a new payment provider during lockdown, with the possibility that they may decide to switch on an ongoing basis.

The environment generated by the COVID-19 crisis seems to have initiated a cross-generational shift towards digital channels and digital payment methods, such as contactless, digital wallets and QR codes, away from the more traditional methods of payment. During this period consumers appear to have been more open to trying different methods of payment: 41% of consumers who classified themselves as high cash users admitted to trying a contactless card; 35% who owned a card added it to a digital wallet; and 27% of customers experimented with QR code payments.

The findings indicate that the circumstances of the pandemic – increased online shopping from home; decreased acceptance of cash and increased use of contactless to avoid handling coins and notes; internet banking in preference to bank branch visits - have encouraged previously digitally non-savvy customers to consider new ways to pay. 

The effects of these consumer behavioural changes are now making themselves apparent. With the decline in cash usage the requirement for ATM’s has decreased. Only this month the Post Office announced that is to cut a third of its cash machines in the next 18 months with 600 ATMs to be shut by March 2022. The Royal Mint is not planning to make any new 2p or £2 coins over the next decade, due to the decrease in demand for coins.

The concern of moving away from cash too quickly has always been the impact upon the vulnerable and disadvantaged in society. New research released by the consumer group Which? revealed that thousands of people have been prevented from paying with cash since March – over 2,500 reported their problems to Which? Of those who did not have an alternative method of payment, 38% were attempting to pay for groceries and 17% were trying to buy medicine. 

A decade ago, cash was used in 6 out of 10 transactions but by 2019 it was used in less than 3 in 10. Between early March and mid-April the market demand for notes and coins is reported to have declined by 71%. The effect of the pandemic has been to accelerate trends and changes in payments into a much shorter timeframe than might have otherwise been anticipated.

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