SHERIDAN, WY, USA, September 19, 2022 /EINPresswire.com/ — According to IMARC Group’s latest report, titled “Digital Payment Market: Global Industry Trends, Share, Size, Growth, Opportunity and Forecast 2022-2027,” the global digital payment market is expected to exhibit a CAGR of 17.8% during 2022-2027. Digital payment refers to the transfer of money from one account to another by utilizing digital devices, including mobile phones, points-of-sale (POS), computers, etc., via the internet. It is easy and convenient, as digital payments reduce cash dependency and increase transaction speed. Digital payments provide high transparency and security by improving traceability and accountability while reducing money theft. They improve financial inclusion by raising access to various financial services, such as savings accounts, credits, and insurance products. Digital payments are processed by secure gateways and are extensively utilized in the media and entertainment, retail, automotive, healthcare, transportation, and education sectors across the globe.
COVID-19 Impact Analysis:
We are regularly tracking the direct effect of COVID-19 on the market, along with the indirect influence of associated industries. These observations will be integrated into the report.
The increasing demand for real-time payments among the masses and the widespread adoption of mobile wallets, owing to enhanced security, flexibility, and convenience, are among the key factors stimulating the digital payment market. Apart from this, the escalating focus among e-commerce companies on developing point-of-sale (POS) systems for handling online and in-store transactions is also propelling the market growth. Besides this, the expanding adoption of the 5G networks, which enable consumers to make payments and buy items online effectively, is further fueling the global market. Additionally, the inflating utilization of digital payments by the government bodies to cover several citizen-to-government (C2G) and government-to-citizen (G2C) payments is also driving the global market. Moreover, the elevating usage of digital payments by large enterprises to manage their payment transactions and enhance customer experience is expected to positively influence the digital payment market over the forecasted period.
Digital Payment Market 2022-2027 Competitive Analysis and Segmentation:
Competitive Landscape With Key Players:
The competitive landscape of the digital payment market has been studied in the report with the detailed profiles of the key players operating in the market.
Some of these key players include:
• ACI Worldwide Inc. • Adyen N.V. • Aliant Payment Systems Inc. • Amazon.com Inc. • American Express Company • Apple Inc. • Fiserv Inc. • Mastercard Incorporated • Novetti Group Limited • Paypal Holdings Inc. • Stripe Inc. • Total System Services Inc. • Visa Inc. • Wirecard AG
Key Market Segmentation:
The report has segmented the global digital payment market on the basis of component, payment mode, deployment type, end use industry and region.
Breakup by Component:
• Solutions: o Application Program Interface o Payment Gateway o Payment Processing o Payment Security and Fraud Management o Transaction Risk Management o Others
• Services: o Professional Services o Managed Services
Breakup by Payment Mode:
• Bank Cards • Digital Currencies • Digital Wallets • Net Banking • Others
Breakup by Deployment Type:
• Cloud-based • On-premises
Breakup by End Use Industry:
• BFSI • Healthcare • IT and Telecom • Media and Entertainment • Retail and E-commerce • Transportation • Others
Breakup by Region:
• North America • Asia Pacific • Europe • Latin America • Middle East and Africa
IMARC Group is a leading market research company that offers management strategy and market research worldwide. We partner with clients in all sectors and regions to identify their highest-value opportunities, address their most critical challenges, and transform their businesses.
IMARC’s information products include major market, scientific, economic and technological developments for business leaders in pharmaceutical, industrial, and high technology organizations. Market forecasts and industry analysis for biotechnology, advanced materials, pharmaceuticals, food and beverage, travel and tourism, nanotechnology and novel processing methods are at the top of the company’s expertise.
Our offerings include comprehensive market intelligence in the form of research reports, production cost reports, feasibility studies, and consulting services. Our team, which includes experienced researchers and analysts from various industries, is dedicated to providing high-quality data and insights to our clientele, ranging from small and medium businesses to Fortune 1000 corporations.
By Ellen Caswell, Policy Advisor, Future of Money.footnote [1]
The Covid-19 (Covid) pandemic had a significant impact on people’s payment habits, with cash use falling significantly, and by more than other payment types. This has led to some concerns that Covid has hastened the demise of cash.
But since coming out of lockdown, we have seen a sustained, if partial, recovery in cash use, and more recently, a stabilisation in cash use trends. Moreover, the value of banknotes in circulation remains elevated even two years on from the pandemic, at close to a historic high. This reflects people – up to 60% of the population – holding more cash as a store of value, which is a fundamental role of money.
This article reviews recent data trends and survey evidence to consider where cash usage might head next. While the future trajectory remains uncertain, both in terms of the speed and extent of future decline, what is certain is there remains a significant group of people, with varied characteristics, who value cash.
As the UK’s central bank, we meet the public’s demand for cash by producing high-quality, durable and secure banknotes. We remain committed to this, and, together with other UK authorities, are taking action to protect cash. We continue to monitor trends in cash usage and cash demand to understand what is behind changing behaviours so we know how many banknotes to print, and ultimately, how best we can support access to cash for those who want to use it.
Overview
Cash plays a key role in society – it is used both as a medium of exchange to connect buyers and sellers, and as a store of value. As the sole issuer of banknotes in England and Wales, we are responsible for ensuring that people have genuine, high-quality and durable banknotes that they can use with confidence. This includes deciding how many banknotes to print to ensure we meet demand at all times.
For a number of years, people in the UK have been using less and less cash as part of their everyday spending. But the total value of notes in circulation (NIC) has actually increased as people choose to hold more cash. These trends have persisted for a number of years and have been amplified by the Covid pandemic.
In November 2020, we published a Quarterly Bulletin article that explored cash trends in the early days of the pandemic. As we enter a ‘post-lockdown’ world, this article takes a look at how cash use and cash demand have evolved, and the possible drivers of these trends – both from a transactional and store of value perspective.
We find that, while Covid has had a lasting impact, with some permanent shifts in payment habits towards digital payment methods, cash use has proved resilient, perhaps surprisingly so. There has been a partial recovery in the transactional use of cash, and the value of NIC remains elevated two years on from the start of the pandemic, reflecting people holding more cash as a store of value. Cash therefore continues to be an important form of money for many – one in five peoplefootnote [2] consider it to be their preferred payment method and 1.1 million people Opens in a new window rely on it for their everyday spending. Even for those who may not use it day-to-day, cash remains an important back-up option.
The future trajectory of cash remains uncertain. Our work to understand the ‘new normal’ is therefore ongoing, and we continue to monitor trends in both cash use and cash demand (ie NIC).
Transactional use of cash
What has been the impact of Covid on cash use trends?
Prior to the pandemic, the UK had experienced a marked decline in the use of cash to pay for goods and services. Only 23% of payments in 2019 Opens in a new window were made in cash, down from around 60% a decade ago. In 2020 when the pandemic was in its early stages, this figure dropped by 35% compared to 2019, with cash accounting for 17% Opens in a new window of all payments. Since 2017 cash use had been declining by around 15% each year Opens in a new window, so 2020 represented an acceleration of this decline.
There has since been a sustained, if partial, recovery in cash use, and more recently, signs of stabilisation in cash use trends. In 2021, there was a reduction in the rate of decline in cash use, with cash accounting for 15% of all payments Opens in a new window in the UK. Moreover, an estimated 73% of consumers Opens in a new window said they used cash in January 2022, a notable increase from only around half of consumers in mid-2020. The recovery in cash use can also be seen in ATM withdrawals (Chart 1).footnote [3] These fell sharply at the start of the pandemic: overall withdrawal values decreased by 50%, with even larger falls in city centres and transport hubs. Since then, consumers have been withdrawing more cash, and overall cash use has been largely stable since around mid-2020, hovering at about 30% below pre-pandemic levels. This suggests that, at least in the near term, cash use has stabilised.
Chart 1: ATM withdrawals have recovered but remain below pre-pandemic levels
Footnotes
Source: LINK ATM network.
Given cash use was on a declining trend prior to the pandemic, it is worth considering the additional impact of the pandemic on cash use. By extrapolating the declining trend in ATM withdrawal values in the years before the pandemic (Chart 2), we find that, in 2022 Q2, ATM use was around a fifth down on where it might otherwise have been. This suggests that Covid has accelerated the pre-pandemic trends seen in cash use, and may have brought forward cash decline by over five years, reflecting a change in people’s payment preferences.
Chart 2: ATM withdrawal values are around a fifth down on where they might otherwise have been had the pandemic not happened
Footnotes
Sources: LINK ATM network and Bank calculations.
What remains highly uncertain is where cash use will head next. On the one hand, Covid appears to have brought forward, and accelerated the rate of change in payment preferences. On the other, if those who were most likely to change their behaviour already have, then the pace of change may actually slow. UK Finance expect this to happen Opens in a new window, and predict that by 2031, 6% of all payments will be made in cash. Understanding what influenced demand during the pandemic, and subsequent recovery, might offer some clues about cash’s future trajectory.
What has been driving cash use over the Covid period?
In our previous Quarterly Bulletin article we identified four factors that were impacting the public’s use of cash during the pandemic. These included: overall levels of consumer spending; online shopping; attitudes to cash versus alternative payment methods; and cash acceptance. Below we explore how these have changed over the past 18 months, with Table A providing a summary of the findings.
Table A: Explanations for the partial recovery in cash use over the Covid period
Driver
Explanation
Change since end-2020
Consumption
Increase in consumers’ opportunities to spend as lockdown restrictions eased.
Consumption, including cash transactions (as proxied by cash centre inflows), has increased.But cash transactions in 2022 remain below pre-pandemic levels.
Online shopping
Partial reversion in the way people shop towards in-person payment methods (as opposed to online) due to less concerns over virus transmission.
Online share of retail spending – which does not allow for cash use – has decreased since its lockdown peak, though remains above pre-pandemic trends.
Consumer attitudes to cash versus other payment methods
Less concerns about the risk of Covid transmission via banknotes.
Survey results suggest a decrease in people’s concerns about handling cash for hygiene reasons.
Retailer action regarding cash acceptance
Less restrictions on the way people pay in shops, as retailers no longer encourage cashless payment methods.
Market intelligence suggests the majority of retailers are accepting cash and no longer actively encouraging contactless payments.Survey results suggest a decrease in people encountering a shop that does not accept cash.
The recovery in overall household spending Opens in a new window, which as at 2021 Q4 had almost returned to pre-pandemic levels, has supported increased cash use.footnote [4] This reflects the reopening of the retail sector – following temporary closures amounting to 8 months for shops and ten months for indoor hospitality – as well as the lifting of all social distancing restrictions.footnote [5] It also likely reflects the fact that for many households, incomes were supported by the availability of government schemes such as the Coronavirus Job Retention Scheme and the Self-Income Support Scheme.
Although cash transactions have increased since the start of the pandemic, they remain below their pre-pandemic levels. And they have not recovered to the same extent as consumer debit and credit card payments (Chart 3). This suggests there was also a shift in people’s payment preferences during the Covid pandemic.
Chart 3: Falling cash volumes have recovered, but not as much as consumer spending
Footnotes
Sources: Bank of England, Note Circulation Scheme membersfootnote [6] and Office for National Statistics.
One factor that is likely to have driven this shift in people’s payment preferences during the pandemic is the concern over virus transmission. In particular, it is likely to have changed both the way people shopped (online or in store) and the types of payment methods they used in store (cash or card).
The pandemic saw an increase in online shopping Opens in a new window, with the online share of UK retail spending peaking at 36% in February 2021, compared with 20% a year earlier (Chart 4). At least part of this can be attributed to government restrictions put in place as a result of Covid, such as the closure of high street shops, which limited the opportunities available for consumers to spend cash in-store. The online share of retail sales has subsequently fallen back, and in June 2022, accounted for 25% of UK retail spending, which may have increased opportunities to pay with cash. That being said, online spending remains popular, with its share of retail sales remaining above pre-pandemic trends.
Chart 4: The online share of retail sales has decreased in the past year, but remains above pre-pandemic trends
Footnotes
Source: Office for National Statistics.
As well as prompting a shift towards online shopping, Covid also affected the types of payment methods that people used in-store. This is due to a combination of consumers’ attitudes to cash versus other payment methods, as well as retailers’ actions on cash acceptance.
In terms of attitudes to cash, people have become more willing to use cash since the height of the pandemic. Our survey in October 2021 found that 27% of respondents were using less cash because they were worried about handling cash for hygiene reasons. This is a decrease from previous Bank surveys in 2020 and 2021, which saw this figure peak at 39%. Attitudes have perhaps evolved as the general concern over virus transmission has reduced along with increased understanding that cash use does not pose a greater risk than any other payment type.footnote [7] That being said, 56% of respondents in our survey in October 2021 were using less cash since the start of the pandemic because they preferred using cashless payment methods. This suggests some permanent shifts in payment habits towards digital methods.
In terms of cash acceptance, we interviewed a number of large retailers in 2022 H1 to discuss the payment trends they were seeing, and their payment strategies going forward. Our interviews indicate that the vast majority of large retailers are accepting cash and no longer actively encouraging contactless payments. Retailers told us that they are ambivalent to the payment methods that consumers choose to use. This represents a shift from early on in the pandemic when – in line with UK Government advice – many retailers, including the large supermarkets, encouraged consumers to use contactless payments, although most still accepted cash. This is reflected in the data: our latest survey suggests that the number of people encountering a store that did not accept cash has fallen: from 44% in July 2021 down to 35% in July 2022 (Chart 5). Furthermore, 98% of small business owners Opens in a new window have said that if a customer needed to pay in cash they would not refuse them.
Chart 5: The number of cashless stores encountered by the public has decreased in recent months (a)
Footnotes
Source: Bank of England.
(a) In our survey, consumers were asked: ‘In the past month, how many shops or stores have you visited that do not accept payment in cash? This could include supermarkets, clothes shops, restaurants, hairdressers, etc’.
Looking ahead, research conducted by the Financial Conduct Authority Opens in a new window during the pandemic found that 80% of small and medium-sized enterprises think they are very likely to accept cash over the next five years. This suggests that retailers consider cash to be a relevant payment offering and one that their customers still want to use.
Cash remains an important form of money for many
It is clear that the pandemic has had an impact on payment habits, with some shifting permanently towards digital payment methods. It is unlikely that cash use will recover much further from its current level, as reflected by the recent stabilisation in transactional cash use data. We are still in the early days of ‘post-lockdown’ however – we may be able to learn more about the future trajectory of cash use by considering which groups in society have a strong preference to use cash.
Cash remains an important payment method in the UK, and a critical means of payment for many people. This is borne out by research on consumer attitudes to cash. Our survey in July 2022 found that around one in five respondents consider cash to be their preferred payment method, and so use it day to day. This figure has not varied significantly over the course of the pandemic – or compared to pre-pandemic – suggesting that a significant proportion of those reliant on cash did not make the switch to contactless or digital payment methods.
Cash remains a valued form of money for the elderly and those on lower incomes, with many using it to budget and manage their household finances. In July 2022, cash as first preference payment method was most popular among those aged 65+ at 27%, up from 20% in July 2021 (but still below pre-pandemic figures of 38% in January 2020).footnote [8] It continues to be most prevalent among those in lower socio-economic groups C2, D and E (28% in July 2022). It is important to recognise, however, that preference for cash depends on a range of factors – not just age or social grade. These include education, wealth and health. For example, a 2020 survey by the Financial Conduct Authority Opens in a new window found that 46% of the digitally excluded, 31% of those with no educational qualifications, and 26% of those in poor health rely on cash to a ‘great or very great extent’. Furthermore, some people with physical and cognitive disabilities Opens in a new window find other payment methods difficult to use (due to not being able to remember a PIN for example).
Even those who do not use cash on a day-to-day basis find it a valuable form of money. Our survey found that just 35% of respondents in July 2022 thought they could go more than a month without cash (Chart 6). This is a decrease from January 2021 where the figure was higher at 48%, and a return to pre-pandemic figures.
Chart 6: The length of time people think they can go without cash has decreased in recent months
Footnotes
Source: Bank of England.
Cash is also recognised as an important backup option. In our survey in March 2022, 85% of respondents said that they think that cash should be there for backup, for example in case technology fails or if a card is not accepted. Cash was also considered by respondents as the payment method that is ‘the most safe, convenient and trustworthy’. Seventy-eight per cent of respondents think that it is important that there is a physical form of money and 88% agree that ‘banknotes should be there for people who need, or want, to use them’.
Taken together, this suggests that Covid has had a sizable impact on cash demand, but for a sizable proportion of the population cash remains vital and so is likely to be a critical part of the UK payments landscape to come. The Bank and other UK authorities remain committed to supporting cash as a viable means of payment and are taking action to protect it. For more detail, see Box A.
Box A: Legislative reforms on cash
For cash to remain a viable payment method, the public needs to be able to access it. The cash infrastructure that helps ensure effective distribution of cash around the UK was built for a time of much higher cash usage. The Bank, other UK authorities and the cash industry have therefore taken steps to ensure that this cash infrastructure remains fit for purpose, both on the retail side – cash withdrawal and deposit by households and businesses – and the wholesale side – the sorting, authentication, storage and distribution of cash.
In July 2022, new legislation was introduced Opens in a new window to UK Parliament as part of the Financial Services and Markets (FS&M) Bill to protect cash by ensuring its continued retail access. In particular, the legislation aims to: ensure that people do not have to travel beyond a reasonable distance to withdraw or deposit money;footnote [9] designate the firms that will be responsible for meeting these geographic requirements; and ensure that the Financial Conduct Authority has appropriate regulatory oversight of cash service provision. The UK Government consulted on these Opens in a new window legislative proposals in July 2021.
The cash industry is also taking additional action in the retail space, with banks, building societies and the Post Office working together to deploy shared solutions in communities that require access to cash.
The Bank’s primary responsibilities in the cash system relate to the supply and wholesale distribution of banknotes. The FS&M Bill introduced to Parliament in July 2022 also contained legislation Opens in a new window to provide the Bank with the powers it needs to keep the wholesale cash infrastructure effective, sustainable and resilient into the future. These powers were summarised in a policy statement Opens in a new window published by the UK Government in April 2022.
The powers will help underpin industry-wide commitments made by industry stakeholdersfootnote [10] to ensure the continued effectiveness, resilience and sustainability of wholesale cash infrastructure. These industry-wide commitments were published by the Wholesale Distribution Steering Group in December 2021. And through 2022 Q1, firms outlined to the Bank their individual, measurable commitments to which they are willing to be held to account, and against which the Bank has already started monitoring.
Cash as a store of value
What has been the impact of Covid on cash demand?
While transactional cash use fell, the value of Bank of England NIC actually increased during the pandemic (Chart 7). In fact, the value of NIC increased by £12.3 billion between end-March 2020 and end-June 2022. This represents a growth rate of 17%.
Since the Government’s removal of all Covid-related restrictions in August 2021, NIC has continued to grow. But it has done so at a slower rate. June 2022 year-on-year growth was close to zero (due to much stronger growth at the same time the year before). This suggests that, similar to trends in transactional cash use, Covid has had an impact on cash demand, with signs of stabilisation in recent months.
Chart 7: The value of notes in circulation has increased since the start of the pandemic
Footnotes
Source: Bank of England.
What has been driving cash demand over the Covid period?
The continued rise in the value of NIC may, at first glance, appear at odds with falling transactional cash use. However, what this trend suggests is that cash is increasingly being used as a store of value, which is a fundamental role of money.
This trend is not new, and is a similar one to that seen in other countries (Chart 8). It is the reason for the 50% increase in the value of NIC in the UK between 2012 and 2021, despite falling transactional cash use over the same period. It is also consistent with the role that cash has played throughout history as a safe asset that people turn to in times of economic and social uncertainty, and when interest rates are low.
Chart 8: The growth rate of the value of notes in circulation has been positive for most countries
Footnotes
Sources: Bank of Canada, Bank of England, European Central Bank, Reserve Bank of Australia, Riksbank, US Federal Reserve System and Bank calculations.
In our November 2020 Quarterly Bulletin article, we set out some possible explanations for the changes in NIC at the start of Covid. The primary drivers for the increase in cash demand that we identified were: people choosing to hold more cash as a store of value for contingency purposes (particularly in the early days of the pandemic); and cash taking longer to be deposited as Covid restrictions eased in mid-2020. This was evidenced by the weaker inflows of banknotes to Notes Circulation Scheme cash centres between April and August 2020.
There are several reasons why NIC has remained elevated, even two years on from the start of the pandemic when all government restrictions have been lifted and the UK economy is fully open.
First, the three lockdowns that took place in the UK in 2020 and 2021 likely meant a build-up of cash due to people having fewer opportunities to spend it. This build-up of cash during the pandemic is somewhat similar to trends seen in other forms of money, such as deposits (Chart 9).
Chart 9: There has been a general increase in both household savings and cash demand since the onset of the pandemic
Footnotes
Source: Bank of England.
Although interest rates have started to rise in the UK, relatively low levels of interest rates over the past two years have also likely provided little incentive for people and small businesses to deposit the cash they have built up over the pandemic. In fact, historically, strong periods of banknote growth – due to greater economic or financial uncertainty or large exchange rate movements for example – have not seen a reversal in growth even when the shock itself dissipates. The same appears to be true here.
Economic uncertainty and rises in the cost of living over the past year may have also incentivised people to hold more cash over the past two years. We know from previous Bank surveys that the tangible nature of cash helps some people to budget and manage their household finances. A survey in May 2022 Opens in a new window by the consumer group, Which?, found that one in five respondents who do not regularly use cash expect to start using it if the cost of living continues to increase.
While travel restrictions have eased in many places, in some instances, travel restrictions (such as the requirement for pre-departure ‘fit to fly’ tests) remain in place. 2022 also saw travel disruptions, often due to staff shortages in the travel industry, which may be discouraging people from taking holidays overseas. Restrictions on international travel could be disrupting cross-border cash movements. In particular, it could be disrupting cash spending from tourism, suggesting that overseas demand for banknotes, at least in the earlier days of the pandemic, would be mostly to hold in reserve.
The future path of banknote demand remains uncertain, and will depend both on changes in cash’s store of value role as well as cash’s use for transactions. We have already seen a slowing in the growth rate of NIC this year. This growth may continue to slow, and perhaps NIC may even fall back from its current elevated level if the banknotes held in reserve over the past two years are spent and deposited.
Understanding the store of value trend
In order to better understand the trend towards holding banknotes as a store of value domestically, we commissioned, oversaw and analysed the results of two surveys: on UK households’ use of banknotes as a store of value; and on self-employed individual’s banknote holdings and usage. We also conducted an international survey to assess the prevalence of Bank of England banknotes held overseas, see Box C.
Together these surveys enhanced our understanding of the drivers of the store of value trend that we have seen in the UK. This in turn has been useful in helping to improve our internal modelling and forecasting of the demand for banknotes, and can even help inform decisions on how many banknotes we should print.
Household use of banknotes as a store of value
In March 2021, we ran a household survey to gain further insights into people’s motivations for holding cash as a store of value and how these have changed over the past few years. Five thousand adults in England and Wales were surveyed using a combination of online and telephone interviews to ensure that we captured those who are not digitally connected (and who might well be higher cash users).
Our survey found that 60% of adults in England and Wales held cash in reserve. This chimes with research by UK Finance Opens in a new window conducted in June 2021, which found a similar proportion of people (59%) were holding cash at home. In our survey, the median amount of cash held was £167. About a third of respondents held less than £100, but a small group of people held large values.
Based on our analysis of the survey data, we estimate that around £10 billion to £30 billion of Bank of England banknotes are held in reserve by households domestically, and we have a high degree of confidence that at least £10 billion is held by households. See Box B for key caveats and assumptions made. Households holding cash in reserve is therefore likely to be a key driver of cash demand.
There are many reasons why people hold cash in reserve. But our survey suggests that the pandemic did cause a cohort of people (17%) to increase their holdings of cash (Chart 10). For those who said that they now hold cash in reserve even though they did not in the past (16%), the two main reasons given were because they were worried about an emergency (32%) or wanted to feel more in control of their money (22%).
Chart 10: Covid, and the risk of entering lockdown, led some people to hold cash in reserve
Footnotes
Source: Bank of England.
Whether people hold cash in reserve or not does not vary significantly with age group. However, younger people are more likely to acquire cash as a gift from family and friends, whereas older people are more likely to acquire it from a bank branch or ATM. This suggests that older people are more actively seeking to hold cash in reserve.
Self-employed individuals’ banknote holdings and usage
Similar to the household survey, we also ran a survey in March 2021 to determine how much cash is held in reserve by self-employed individuals in England and Wales. This is because the self-employed are likely to be heavier-than-average cash users, and may hold more cash to run their businesses.
The survey comprised of 2,000 self-employed individuals using a combination of online and telephone interviews, designed to be representative of the adult population in England and Wales. Respondents who considered themselves to be freelancers, sole traders or self-employed were all classified as ‘self-employed’ for the purpose of our analysis.
Our survey found that in March 2021, 37% of the self-employed in England and Wales held cash in reserve. This translates to approximately 1.6 million self-employed people. Holding cash is more common among those with employees (64% among those with three to five employees) than those with none (49%). Interestingly, there is little relationship with turnover, length of time of self-employment, or most demographic indicators.
The median amount of cash held by the self-employed was £188, somewhat higher than for households. As expected, those businesses that take more payments in cash hold larger amounts of cash in reserve: 26% of those who take more than half of their payments in cash said that they hold more than £1,000.
Overall we estimate that £1.2 billion to £1.5 billion of Bank of England banknotes are held in reserve by the self-employed in England and Wales. Similar to the household survey, we made a number of assumptions to scale up our survey results to produce an estimate for the population as a whole. This included: weighting our sample data to mirror the demographic characteristics of the true population; removing and reweighting extreme values; and deciding whether and at what point to cap the distribution (winsorised mean).
Our survey suggests that 16% of the self-employed who held cash in reserve three years ago, hold more now. And 35% hold less cash in reserve now compared to three years ago. There are several reasons why self-employed people now hold cash even though they did not three years ago (Chart 11).
Chart 11: There are several reasons why self-employed people now hold cash even though they did not three years ago
Footnotes
Source: Bank of England.
Box B: Survey caveats and key assumptions made
We took a survey-based approach to estimate the total value of Bank of England banknotes held in reserve by households in England and Wales.
As these notes are not being used for transactions, they are not circulating frequently through the economy and therefore would not be processed regularly at cash centres as part of banknote authentication and fitness requirements.
There are a number of challenges of any survey-based approach. The first is that the demographic profile of the sample will rarely exactly mirror the demographic profile of the true population. To reduce this sampling bias, we weighted our sample data, using a method called raking, to mirror the demographic characteristics of the true population.
Another challenge is ensuring open and honest responses. Personal finances are a sensitive and private topic. And banknotes represent a physical security risk to those who hold them. Survey respondents may therefore be unwilling to provide data on their banknote storage habits, underreport the data or provide an extreme response – all of which skew the survey findings.
We aimed to address this response bias in a number of ways. We offered respondents a choice of how to share information on the value of cash held in reserve ie either as an open numerical response or selecting from closed range options. Furthermore, in analysing the data, we examined extreme values to assess whether they might be genuine or dishonest. We considered a range of approaches to adjust for extreme values we suspected might not be genuine. Reflecting the inherent uncertainty in these adjustments, we chose to present our estimate of banknotes held domestically as a range rather than as a point estimate. The width of this range (£10 billion to £30 billion) highlights the uncertainty of survey-based methodologies, especially when differentiating between noise (measurement error) and signal (relatively rare households with very high banknote holdings) at the tail of our sample distribution.
That being said, we are highly confident that at least £10 billion of Bank of England banknotes are held in reserve by households domestically in England and Wales.
Box C: International banknote demand
A significant, but difficult to measure, source of demand for Bank of England banknotes is from non-residents. For example, we have observed increased demand for £50 (the highest denomination) banknotes when sterling depreciates.
Non-residents may choose to hold Bank of England notes as hard currency – as a store of value. They may also hold banknotes in preparation for a holiday in, or a relocation to, the UK. The inherent anonymity of banknotes, however, means that it is hard to estimate the value of UK banknotes held as a store of value overseas. Similarly, the foreign exchange market is highly fragmented and so it is hard to estimate the value of UK banknotes held within it, or by tourists.
Given these challenges, we ran some exploratory analysis in 2021 to further our understanding of the overseas demand for Bank of England banknotes across 11 countries.
The survey provided us with a number of insights. On average, 23% of respondents across all countries surveyed reported holding Bank of England banknotes. This result was higher than we anticipated, but plausible when compared against other currencies: 36% and 35% of respondents stated that they have US dollar banknotes and euro banknotes in their possession respectively. On average, those holding sterling banknotes hold £59. However, this varies significantly across countries.
As expected, tourism-related reasons are the most common for those holding Bank of England banknotes across all countries surveyed (63%). Only 16% of those holding Bank of England banknotes are doing so for store of value purposes. And 31% of respondents holding Bank of England banknotes received them as a gift.
These results gave us one of the first insights into the extent of overseas demand for Bank of England banknotes. Because this was an original piece of analysis, there are few other studies to compare the results to. But the results suggest that overseas holdings make up a significant portion of demand for our banknotes.
Conclusion
Over the past decade, the fall in transactional cash use in the UK has been accompanied by a rise in the value of notes in circulation. Covid intensified this trend.
As Covid restrictions have lifted, we have seen a partial recovery in cash use, and more recently, a stabilisation in cash use trends. The value of notes in circulation remains elevated even two years on from the pandemic, as people are holding more cash as a store of value.
Looking ahead, it seems unlikely that cash use will recover much further from its current level. This is likely to be the result of a permanent shift in payment habits towards digital payment methods as a result of the pandemic. However, there remains a sizable share of the population who value cash and for whom cash remains their preferred means of payment. Where cash trends go next – both in terms of speed and extent – will therefore be highly influenced by the payment preferences and behaviours of this group going forward.
Our work to understand these trends in cash demand and the drivers for change is ongoing. We conducted surveys in 2021 to gain further insights into the store of value role of banknotes. This included estimating the value of NIC that are held in reserve by households and the self-employed domestically. We will build on this analysis by estimating the value of banknotes held in the transactional cycle. We will also continue to engage with Note Circulation Scheme members and ATM operators to get an up-to-date view on customer demand for banknotes. We will continue to hold interviews with a range of large retailers to learn more about their cash holdings, the cash trends they are seeing and their attitudes to cash acceptance. This monitoring will contribute to our assessment of the future path of NIC and transactional demand. This will, in turn, inform decisions on how many banknotes we need to print to ensure that demand is met.
Critically, it is clear that cash remains important to many in society. The Bank, and UK authorities, are committed to cash, and together we are taking action to ensure that the wholesale cash distribution infrastructure remains effective, sustainable and resilient in a lower cash usage world. The new legislation, which will protect cash by ensuring its continued access and provide the Bank with powers over wholesale cash distribution, is a significant step to helping us achieve this.
We will continue to work closely with the cash industry and other authorities who have responsibility for cash to ensure that cash remains available and accessible for those who want to use it.
The author would like to thank Rebecca Burnham, Nick Butt, Anooj Dodhia, Molly Galligan, Miranda Hewkin Smith, Sarah John, David Learmonth and Sagar Shah for their help in producing this article.
Bank of England January 2022 survey.
People in the UK acquire about 93% of their cash from ATMs, with most of the rest coming from bank branches, Post Office branches, cashback and wages (UK Finance Report, ‘UK Payment Markets 2022’).
During the first two quarters of the pandemic in 2020, household spending Opens in a new window fell 22% because of the introduction of lockdowns and other public health restrictions. Household spending recovered 20% in the following quarter and has continued to increase since.
Bank of England banknotes are distributed primarily by members of the Notes Circulation Scheme, who have a contractual relationship with the Bank, and between them operate cash centres located around the UK.
Our 2020 study to explore how the coronavirus virus behaves on banknotes found that the risk of transmission via banknotes is low.
Due to the pandemic, the methodology of our survey changed from July 2020, with survey questions completed via telephone instead of face to face.
As at 2021 Q4, it is estimated that for access to any bank, building society, Post Office branch or ATM: 95.7% of the UK population are currently within two kilometres of a cash access point; and 99.7% of the UK population are currently within five kilometres of a cash access point.
The Bank has been working with relevant industry participants as part of the Wholesale Distribution Steering Group to ensure that wholesale cash infrastructure continues to support the effective retail provision of cash.
Global Crypto Payment Gateway Market is expected to grow with the CAGR of 22.8% over the forecast period. Increasing adoption of cryptocurrencies broadly and growing investment in this field are some of the major factors driving the growth of the Global Crypto Payment Gateway Market.
Scope of Global Crypto Payment Gateway Market:
Cryptocurrency Payment Gateway is a dynamic payment processing infrastructure that allows merchants and providers to accept payments across different cryptocurrencies while ensuring security. Using this service, users can transfer money directly from one wallet to another. In addition to their main functions, these payment gateways are responsible for securely distributing the payment’s sensitive wallet-related data to the merchant’s software. This payment network is commonly used by businesses of all sizes as they search for the most profitable, secure, and fast payment methods. Furthermore, the blockchain ecosystem underscores the crypto payment gateway, which provides record-breaking and transaction transparency. And, the decentralized structure of blockchain eliminates intermediaries such as banks from the payment process, speeds up transactions, and slows down the payment processing process. Finally, the system encourages more people to use digital currencies and adds to the growing popularity of decentralized gateways.
Over the past year, Covid-19 has dramatically accelerated the wave of online fraud. Most businesses are now operating Crypto Payment, at least partly online, providing a perfect landscape for attackers seeking to harvest and exploit valuable data. It is not surprising to learn that identity fraud has had the greatest impact on financial services, followed by professional services. It is understandable that as the number of sensitive information passed online has increased, so has the number of attackers trying to block it. For this, many crypto payments gateway players in the market have offered various facilities to the customers which have received a huge response from the customers in the Covid-19 era.
Global Crypto Payment Gateway Market Segmentation:
Global Crypto Payment gateway market is segmented into type, application, and region & country level. Based on type, the crypto payment gateway market is segmented into web based and mobile based and hybrid. Based on application, the crypto payment gateway market is segmented into iGaming, online entertainment projects, e-Stores and others.
By Type:
Web Based
Mobile Based
Hybrid
By Application:
iGaming
Online Entertainment Projects
e-Stores
Others
The regions covered in this Crypto Payment Gateway market report are North America, Europe, Asia-Pacific, and Rest of the World. Based on country level, market of global Crypto Payment Gateway is sub divided into U.S., Mexico, Canada, UK, France, Germany, Italy, China, Japan, India, Southeast Asia, GCC, Africa, etc.
Key Players of Global Crypto Payment Gateway Market Report:
Some of the key players for global crypto payment gatewaymarket are:
Gox
Coinbase
Coinsetter
BitPay
Avalon
BitcoinX
Nvidia
ATI
Bitcoin Foundation
NOWPayments
Blockonomics
Coingate
Spectrocoin
CoinPayments
others
News: PayCEC Launched Cryptocurrency Payment Gateway and SEPA Transfers Acceptance
On November 12th, 2021; US-based payment gateway provider PayCEC introduced cryptocurrency payment gateway as cryptocurrencies continues to gain popularity globally. The firm said that its payment gateway will be upgraded to accept cryptocurrency transactions, enabling merchants or providers to accept payments in different cryptocurrencies. Additionally, PayCEC was also launching Single Euro Payments Area (SEPA) transfer acceptance to enable faster funds transfers within the Eurozone. The move is expected to enhance payment acquiring process for E-commerce and online businesses through access to digital banking transactions.
BitPay Partners with Wix Enabling Wix Merchants to Accept Crypto Payments
On October 12th, 2021; BitPay, the world’s largest provider of blockchain payment services, and Wix is a leading global SaaS platform for creating, managing, and expanding its online presence, and integrates BitPay’s Bitcoin and cryptocurrency payment process as a new payment option on the Wix eCommerce platform. BitPay’s blockchain payment rail integrates seamlessly with Wix’s ecommerce platform, allowing Wix merchants to offer their customers Bitcoin and other cryptocurrency payment options.
Remitano Launched New Crypto Payment Gateway and Offered Special Deals for the First 50 Merchants
On August 27th, 2021; The Remitano Crypto Payment Gateway is a new service that will allow users to pay for goods and services with cryptocurrencies fast and securely. Remitano currently supports crypto payments using 6 different coins: BTC, ETH, USDT, XRP, LTC, and BCH. The service will make it possible for businesses to operate regardless of borders, thanks to blockchain technology. It will provide merchants with the opportunity to expand their businesses to millions of Remitano crypto users and investors across the globe.
Bitfinex Launched Cryptocurrency Payment Gateway for Merchants
On March 4th, 2021; Cryptocurrency exchange company Bitfinex launched Bitfinex Pay, a cryptocurrency payment gateway. With this new product, online merchants can accept payments in various cryptocurrencies. It should make cross-border transactions easier in particular.
Global Crypto Payment Gateway Market Dynamics:
Increasing adoption of cryptocurrencies broadly is one of the major factors driving the growth of the global crypto payment gateway market. Cryptocurrencies are proliferating and becoming popular across the global. A decade since their dawn with the invention of Bitcoin, the value of all cryptocurrencies reached USD 0.25 trillion. To put that in perspective, there are 1.7 trillion USD and USD 1.4 trillion Euros in circulation today (European Central Bank 2019; U.S. Federal Reserve Board 2019). In November 2019, bitcoin is the world’s sixth-largest currency in circulation. The average daily trading of cryptocurrencies has surpassed one percent of trading in foreign exchange markets, the world’s largest market by trading volume. Bitcoin transactions and unique accounts alone have grown at nearly 60 percent per annum over the past 5 years. In short, cryptocurrencies are being adopted rapidly and broadly. Also, trading in Bitcoin has increased significantly over the last few years. Young people around the world are investing heavily in this. As a result, Bitcoin’s investment is growing exponentially. For instance; Indian crypto exchanges recorded their biggest investment levels ever, not only in terms of the number of investors but also in the sums invested. According to crypto research and intelligence business CREBACO, Indian crypto investments have increased to over USD 10 billion from USD 923 million in April 2020. And, According to Brandessence estimates that as much as 20 percent of the worldwide bitcoin network remains in China. That’s the reason, growing adoption of cryptocurrencies is driving the crypto payment gateway market.
The growing innovations in the crypto payment gateway market as well as the rising investments being made by players are also fostering the market growth. In February 2020, India-based crypto exchange CoinDCX partnered with OKEx Digital Asset Exchange to provide OKEx with exposure to the Indian market. This development will open the door to the immense liquidity of Bitcoin for trading applications in one of the fastest-growing economies in the world. In November 2019, SecuX launched the crypto POS payment ecosystem as a complement to the hardware wallet. This enables users to pay using the app either on a vending machine or through a physical store. In December 2019, Wirex partnered with i2C on Asia-Pacific blockchain-based payment cards. The payment card enables users to transact in more than 150 digital and traditional currencies, including Bitcoin, British Pound, Australian, and US Dollars, Japanese Yen, and other currencies. It enables users to pay and receive benefits by debit, credit, or digital currency. Thus, the number of such developments among the major players drives the growth of the market. In addition, the Central Bank of the Philippines approved 16 cryptocurrency exchanges. This kind of market movement has created a great impetus for the market.
However, lack of awareness in the developing and underdeveloped economies may hamper the market growth. In spite of that, increasing advancements in this field may create more opportunities for the further growth of the market.
North America, U.S., Mexico, Canada, Europe, UK, France, Germany, Italy, Asia Pacific, China, Japan, India, Southeast Asia, South America, Brazil, Argentina, Columbia, The Middle East and Africa, GCC, Africa, Rest of the Middle East and Africa
Global Crypto Payment Gateway Market Regional Analysis:
North America is expected to capture the largest share in the global crypto payment gateway market owing to the high popularity of crypto currencies and its rising adoption and presence of key players in this region. Although the government does cash by consumers as well as fact, many developing countries still focus on using digital money. Acceptance of digital cash by consumers as well as retailers drives the growth of the market. And, rising popularity of cryptocurrency mining and the presence of the major players in this region area also fostering the market growth. PayPal, for example, is an American-based company operating in an online payment system. Entered the cryptocurrency market on October 21st, 2020. and announced that customers will be able to buy and sell cryptocurrency and other virtual currencies using their PayPal accounts.
Asia Pacific is expected to witness a fastest growth in the global crypto payment gateway market owing to the increasing number of technological developments and rising acceptance for virtual currency in this region. In addition, rising number of partnerships and collaboration activities among the market players in this region are also fostering the market growth. For instance; in January 2020, Z corporation, Inc. and TaoTao Inc. collaborated with the financial service agency to expand the crypto market by confirming regulatory compliance in the Japanese market. Japan recently accepted a new digital currency exchange during the Covid-19 outbreak. Similarly, In February 2020, India-based crypto exchange CoinDCX partnered with OKEx Digital Asset Exchange to provide OKEx with exposure to the Indian market. This development will open the door to the immense liquidity of Bitcoin for trading applications in one of the fastest-growing economies in the world. In December 2019, Wirex partnered with i2C on Asia-Pacific blockchain-based payment cards. The payment card enables users to transact in more than 150 digital and traditional currencies, including Bitcoin, British Pound, Australian, and US Dollars, Japanese Yen, and other currencies. It enables users to pay and receive benefits by debit, credit or digital currency.
On Special Requirement Crypto Payment Gateway Market Report is also available for below Regions and Country:
North America
U.S.
Canada
Europe
Germany
France
U.K.
Italy
Spain
Sweden
Netherland
Turkey
Switzerland
Belgium
Rest of Europe
Asia-Pacific
South Korea
Japan
China
India
Australia
Philippines
Singapore
Malaysia
Thailand
Indonesia
Rest Of APAC
Latin America
Mexico
Colombia
Brazil
Argentina
Peru
Rest of South America
Middle East and Africa
Saudi Arabia
UAE
Egypt
South Africa
Rest Of MEA
Key Benefits of Global Crypto Payment Gateway Market Report:
Global Crypto Payment Gateway market report covers in depth historical and forecast analysis.
Global Crypto Payment Gateway market research report provides detail information about Market Introduction, Market Summary, Global automotive sensor market Revenue (Revenue USD), Market Drivers, Market Restraints, Market opportunities, Competitive Analysis, Regional and Country Level.
Global Crypto Payment Gateway market report helps to identify opportunities in marketplace.
Global Crypto Payment Gateway market report covers extensive analysis of emerging trends and competitive landscape.
The cryptocurrency market is in turmoil, with assets like Bitcoin (BTC) registering significant lows in recent months, a factor that can presumably sway the investment trend among Americans. However, the number of investors opting to get involved in the sector is growing despite the lingering uncertain future as digital assets operate in an environment marred by a struggling economy and the threat of harsh regulations.
In particular, data acquired by Finbold indicates that as of the 2022 summer season, 18% of Americans had invested in different cryptocurrencies. The figure represents a growth of 125% from the share of 8% of Americans who had a stake in the crypto space during the summer of 2020.
By the 2022 summer, 15% of Americans still had plans to invest in cryptocurrencies, highlighting the belief in the sector despite the market downturn. The value represents a growth of about 36.36% from 11% of Americans who had expressed the intention to venture into cryptocurrencies during the summer of 2020.
Data on Americans’ investment in crypto is retrieved from the Statista Global Consumer Survey that sampled views from over 1,000 U.S. adults aged between 18 and 64 years old.
Investors ignoring crypto winter
Interestingly, Americans’ growing interest in crypto amid extended bear markets partly goes against historical trends where a price drop has not attracted more people.
At the same time, in recent months, the sector has been hit with fraud incidents, with the infamous Terra (LUNA) ecosystem crash taking center stage, with the collapse occurring when more investors turned to stablecoins to help alleviate the crypto volatility.
Notably, the growth indicates the investors in question can stomach the volatility. Such investors likely understand crypto is still an emerging asset class and technology whose impact on the general finance sector is yet to be fully known. In this line, some investors opt to ignore the short-term price volatility and focus on potential future growth.
Drivers for continued investment in crypto
Several drivers are likely informing this trend, with making quick money standing out. Over the years, crypto has been considered to return significant profits in a short time compared to traditional assets like stocks. In this case, investors who missed out on last year’s bull run led by assets like Bitcoin and Ethereum (ETH) are potentially buying in the dip with the expectations the sector will rally again.
Notably, this is one of the riskier motivations for investing in digital assets. In most cases, this strategy’s success depends upon an investor’s ability to time purchases and sales perfectly.
Of importance to mention is that young investors are potentially among the advocates of investing in crypto as a majority hold a genuinely positive outlook on the sector. Therefore, they have the assets expected prices. On the flip side, older investors are known to be more cautious about the industry and the associated risks.
The growth among investors has also correlated with the ability to easily purchase cryptocurrencies with the emergence of new apps catering to the needs of retailers.
At the same time, leading institutions embraced cryptocurrencies triggering a bandwagon of retail investors. Interestingly, some institutions are probably betting on the sector’s growth, as highlighted by America’s oldest bank BNY Mellon, which has received regulatory approval to become the first mainstream lender to offer crypto services.
Meanwhile, other institutional giants are likely taking a back seat and monitoring how the market trends will turn out.
Possible barriers to crypto investments
Due to America’s advanced crypto sector, it is worth noting that there exist potential barriers. Perennially, most people have stayed away from crypto due to factors like complexity. A section of investors still finds the sector too complicated to understand.
In the long run, crypto proponents maintain that the rate of investments will likely grow because previous years have laid the foundation for building the proper infrastructure.
Additionally, cryptocurrencies will probably be integrated more into sectors like payment systems. However, regulation uncertainty remains a crucial concern for most Americans. Notably, the White House and Congress are leading various initiatives to bring clarity to the sector.
An interview with Gabe Olives, Chief Information Officer, Impact 21
Delivering a consistent customer experience that delights customers and keeps them coming back is dependent not only on what people purchase but how they complete the purchase. In a high-frequency retail environment like Convenience and Fuel retail, the focus has traditionally been on product selection, availability, merchandising, and pricing. Retailers are now sharpening their focus on payments strategy in an effort to allow customers choice in using a preferred payment method, one that the consumer feels are secure and saves them time.
Making a purchase at a convenience store for gas or merchandise used to hinge on bank-issued credit and debit cards in addition to private label credit cards issued by the retailer or its branded fuel provider.
To get up to speed on current payment trends in convenience and fuel retail, we tracked down Gabe Olives, CIO at Impact 21, a retail consultancy with deep roots in the convenience sector. This interview with Gabe will open your eyes to the innovation in payments happening today and hint at what the future may hold for payments in convenience and fuel retail.
Q & A with Gabe Olives
Wise Marketer (WM): What is influencing change in payments in convenience retail? What has changed since 2020?
Gabe Olives (GO): The newest payment options have been heavily influenced by consumer demand based on the events of the past two years. During the pandemic, retailers turned their attention to serving customers in touchless, sanitary, and time-saving ways.
The ability to enable online order for either pickup or delivery (mostly via third parties) became a priority for retailers. Other e-commerce trends adopted to meet consumer demand include Buy Online Pickup in Store (BOPIS) and Home Delivery (Retailer to Consumer directly).
WM: What specific payment methods do you see emerging in 2022?
GO: To me, the established payment formats gaining traction today include Mobile, Contactless, and wearables.
Contactless purchases are enabled using tools including 1D (bar code representation of your PAN) and 2D (QR codes). We are also beginning to see the use of 3D (holographic codes) at select retailers.
The proliferation of digital payment wallets is tied to the increased use of Mobile payments. Wallets allow the consumer to add multiple preferred payment types in one portable location. Choice is important to consumers and payment wallets allow choice in payment methods
Two others are worth mentioning, one familiar and one newer.
With the rising fuel price environment, ACH payments (offering a method of payment discount) have gained momentum. Though this is not a new method of payment, it is one that has shown longevity and strength in today’s market.
The entire genre of peer-to-peer payments is becoming more integral to store operations and should become more widely used in the near future.
WM: Of all these options, which are likely to see greater adoption and growth, and which might fade away?
GO: There’s really not an imposter in the group mentioned above, but clearly, some will emerge as easier to implement as well as more popular with customers. For any new method of payment to be sustainable and mainstream, there must be a widely adopted acceptance network of that payment type.
As an example, contactless payments have been in the market for over a decade but are just now becoming more frequently used by consumers. Part of this is because retailers are now enabling Near Field Communication (NFC) reader compatible with their Point-of-Sale (POS) equipment on a systemwide basis to allow EMV capable contactless card based or mobile initiated transactions.
It is not enough for retailers to prompt for usage of a payment method, they must ensure the capability is functioning properly and with similar reliability when compared to something like the tried-and-true magnetic stripe card.
WM: Many convenience store chains are accepting Electronic Benefits Transfer (EBT) food stamp payments. With a large unbanked population to serve, is this something others should be considering?
GO: With the increased traffic in C-stores driven by shifting consumer patterns, the acceptance of EBT should be seriously considered. This can be accomplished via stand-alone terminals or through integrations with a retailer’s card processor.
The integrated path is preferred to ensure program compliance and a more straightforward reconciliation. EBT functionality has been added by most payment processors. The integration requires POS/Payment server/BackOffice support to ensure compliance with program requirements which can vary by jurisdiction. As evidence of the trend, Instacart added EBT processing as part of its omni-channel platform model in early 2022.
WM: Cryptocurrencies are being used for payment in some convenience chains. Should this new option be taken seriously and should it be explored more deeply by retailers?
GO: Crypto remains more of a novelty in the c-store industry as opposed to a mainstream form of payment. That said, Sheetz is one big retailer that introduced the capability to accept crypto for payment in conjunction with Flexa and integrated it into their store technology in partnership with NCR in 2021. Other convenience operators have introduced ATMs capable of deposit and conversion of physical currency into cryptocurrencies.
Whether cryptocurrency enjoys wider adoption remains to be seen. The relatively high transaction fees which can vary based on the volume of transactions and longer timeframes for approvals don’t stack up well against established methods of payment in the industry. Transaction times need to be considered when partnering with providers to ensure transaction times are not increased, negatively impacting customer dwell times.
Step back from the question for a minute and realize that Crypto by design was created first as an investment vehicle rather than as a medium to complete transactions in a high frequency / low average ticket environment. The best way to illustrate this point is to ask, “does it make sense to bring a bar of gold to pay for a cup of coffee?”
WM: What are your thoughts on using Peer to Peer (P2P) payment schemes in convenience retail?
GO: Retailers need to evaluate and consider adding payment methods based on consumer demand. Peer-to-peer payments have grown in popularity over the past 5 years. The initial adoption by Millennials has spread to Gen X and post-Baby Boomers.
There are many competing P2P schemes in the market today including Paypal, Venmo, Zelle, Revolut, WePay, and WhatsApp. Retailers would be wise to create linkages to the plans with the highest volumes as a core group of options and then add others selectively as customers express interest. Giant Eagle did just that in 2021 when it became the first US grocery and convenience store chain to accept Paypal and Venmo in its stores.
WM: What other new payment options are on the horizon and should be watched in the future?
GO: Top of mind for me is Facial recognition, Holographic bar codes, and “just walk out” methods like Amazon One. Trends in consumer privacy and emerging data protection legislation will help determine which of these becomes mainstream.
Take Amazon Go as an example. It’s a palm-based payment system already in use at Amazon Go and Amazon Fresh. For consumers, it is easy to use once the enrollment process is completed.
Travel service Clear does not appear to be going after the payments space in convenience retail as they are more focused on travel, healthcare, and the ticketing market (concerts, sports). It would not be a surprise however to see facial recognition-based payments move into this sector in the future. They have entered the age verification space through pilot partnerships with sports venues.
WM: How should convenience and fuel retailers assess these payment trends and decide which payment options to adopt?
GO: Listening to customers is always a good place to start. Gauging customer demand is more important over the long term than making a decision to implement a new payment method based on economics alone.
Remember that “Convenience Stores” are meant to be convenient. They earned that name for a reason. Payment methods should always enhance the convenient and time-saving nature of a retail visit, not create slower lines by offering too much choice.
Even though the retailer may save a bit of money on merchant fees, if the new method creates a speed bump for processing long lines or is simply not in demand from customers, then maybe it is not worth the investment.
Retailers should also keep an eye on adjacent areas of retail. Consumers tend to build expectations that their favorite aspects of the shopping experience should be adopted by all the retailers they frequent. You could call this the “Amazon effect” as the choice, speed of delivery, and related services that are bundled in Amazon have created an expectation of “retail best practice” for many consumers.
That might not sound fair, but we have to do our best to recognize the needs and desires of our customers.
