11 billion transactions shift to digital payments by 2023

The dramatic shift of consumers away from the use of cash has accelerated once again amid the Covid-19 pandemic. A new forecast suggests transactions worth around £155 billion will move away from physical currency in the coming two years.

The coronavirus has had a number of long-term impacts on consumer behaviour, but one of the most prominent is the understandable desire to avoid public contact points wherever possible. Currently, the onus is on the customer to change their behaviours, rather than on businesses to change their infrastructure. Around 72% of people have either worn gloves or wiped down a public touch surface within the last two weeks. In the long-term, however, their willingness to do so will likely wane, and businesses who move swiftly to accommodate them could make huge gains.

Adding to this previous evidence, a new report from Accenture has found that the number of consumers looking to pay with card, or digital options is likely to explode in the coming two years. The accelerated shift away from cash will need to be addressed by the infrastructure of the UK high street if it is not to be left behind by the transition.

Accenture forecasts that 11.6 billion transactions in the UK will move from cash to cards and digital by 2023. This could worth up to £155 billion in the UK alone, and as consumers avoid in-person payments turn to online shopping and mobile wallets, by 2030, this could have risen to over 50 billion transactions worth up to £484 billion.

Sulabh Agarwal, Global Payments Lead, Accenture, commented, “With the UK seeing the steepest decline in cash usage across Europe, Covid-19 has dramatically accelerated the shift to digital payments at a pace banks could not have predicted. The on-going impact of the pandemic, acutely felt through the second national lockdown, will further entrench lasting shifts in consumer behaviour when it comes to how they shop and pay for products.”

The boom in online shopping will also see e-commerce as a share of GDP grow by a projected 17% in 2020. This particular projection comes at a dire time for bricks and mortar retailers, who have spent large portions of 2020 with their doors closed to the public. Many will have to invest in technology to avoid being totally left behind, at the same time as re-jigging their business models to adapt to long-term behaviour changes among consumers.

The same is also true for banks, with the rapid move to digital payments piling pressure on them to shift their offering. Three-quarters of surveyed bank executives told Accenture that the pandemic has increased the urgency of their plans to modernise payment systems to that end.

Agarwal added, “The pandemic will also increase pressure on banks to meet customer needs that revolve around safety and convenience. While banks have been actively investing in new payments systems, the focus has been on meeting the next compliance deadline. The challenge is to create new propositions and customer experiences at the same time as achieving compliance. But amid these rapid changes, retaining optionality is still key - the industry as a whole must still look to preserve access to cash for those unbanked or unserved customers who rely primary on cash.”