Your Friday fix for global fintech and payments news
As we look to the end of the first month of 2021, we are keeping you up to date with the latest research and announcements in the payments industry. This week we are looking at digital spending and the estimated increases we will see over the next 5 years, as well as focussing on UK consumer spending habits: firstly at the decrease in ATM use, and secondly at the FCA’s statement on increasing the contactless spending limit from £45 to £100.
Our weekly round-up brings you a dose of some of the biggest news announcements from the past seven days so you can keep an eye on all that’s shaping our world this week.
- Digital wallet spend to exceed $10 trillion globally in 2025
- Cash machine use drops by 30%
- FCA considers raising contactless limit from £45 to £100
Juniper Research estimates that the total spend via digital wallets will exceed $10 trillion across the globe in 2025. This is almost double the total spend in 2020, of $5.5 trillion. Juniper Research claimed that the pandemic was largely responsible for the huge shift in consumer payment habits.
The research company also forecasts that contactless and ecommerce payments will have a 50% stake of all total wallet spending, with 34% of contactless payments being made via a mobile by 2025. The huge uptake in consumer adoption leads on to challenges for merchants, such as choosing the right wallets to focus on for acceptance.
“Merchants must base their payment strategies around wallet acceptance in order to support a digitally-engaged addressable market, but must also judge the right wallets to target, or they will be lumbered with increased costs and limited benefits,” said co-author, Alexandria Sadler.
The UK has seen a large decrease in the use of ATMs, according to LINK. 2020 saw only £81 billion withdrawn from ATMs in comparison to £116 billion in 2019, most likely down to the pandemic and subsequent lockdowns with some of this decrease, in part, down to the machine closures in closed shops/pubs.
The use of the ATM has been declining slowly, falling at an average of 10% per year, as the likes of card and alternative payments have increased in adoption. The research from LINK shows that 75% of consumers will use less cash going forward.
“…the sharp decline in ATM use brings significant problems. Cash machines are by the far the most popular way of accessing cash, yet a 37 per cent year on year drop in transactions places enormous strain on the cash infrastructure,” said John Howells, Chief Executive at LINK.
At the beginning of the year, we bought you the news that UK banks were pushing the FCA to look in to increasing the contactless limit spend from £45 to £100. Now, we bring you the news that the FCA is considering this increase.
The Financial Conduct Authority have now released a statement: “It’s important that payments regulation keeps pace with consumer and merchant expectations. Recognising changing behaviour in how people pay, as part of a wider consultation, we will shortly be seeking views on amending our rules to allow for a possible increase in the contactless limit to £100.”
There have been both positive and negative reactions to the potential increase. The number of consumer’s comfortable using contactless payments is on the increase and the amount of merchant who are only accepting non-cash payments is also on the rise. The worry is that the UK could see an increase in the amount of CNP fraud.