Less cash and more electronic payments, the financial changes the pandemic brought

The 2020 health emergency has reportedly increased the use of digital transactions while decreasing the use of physical money.

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Less cash and more electronic payments, the financial changes the pandemic brought
Less cash and more electronic payments, the financial changes the pandemic brought

It has been predicted for some time that cash could ultimately no longer be used to make electronic payments a high priority. Now the COVID-19 pandemic could turn those projections into reality.

Based on the trends from 2019 and through 2020, it is speculated that Global cashless transactions will grow at an annual rate of 12% through 2023. In Latin America, the growth rate will be 6% according to the World Payments Report 2020 published by Capgemini.

The same report found that between 2018 and 2019, 708.5 billion digital transactions were registered worldwide. This means a growth rate of 14%, the highest in the last decade. In 2019, the Asia-Pacific region had the highest volume of cashless transactions: 243.6 billion US dollars, well above Europe and North America.

Such growth is a consequence of the increase in the usage of Smartphones, the rise of E-commerce and digital wallets. There is also innovation in QR code payments, led by China, India and other Southeast Asian markets. In this region, digital payments grew by 31.1%.

Fintech and neobanks: the new competitors

The report found that 30% of consumers use “Big Tech” for payment services and 50% use Neobanks for their transactions. In April 2020, more than 38% of users said they had discovered a new payment provider during the suspension.

Rafael Roncancio, Director of Capgemini Financial Services Mexico and Colombia, commented Neobanks are already challenging traditional banking for growth and profit. Services Fintech They can offer cheaper commissions because they don’t have to invest in as many physical resources (successful, personal, etc.) which translates into lower fees.

One way to accelerate the development of electronic transactions would be Activate payments via WhatsApp. This would help create more confidence in digital broadcasting and reach greater user reach, said Pablo Márquez, President of Capgemini Mexico and Colombia.

In Mexico, 60% of mobile users over 50 reported using WhatsApp. According to a survey by Statista from March to August 2019, the number of respondents between the ages of 18 and 24 increased to 84.5%.

Present and future of electronic money

The Online banking and the direct transfers It became the preferred payment method during the health crisis, according to 68% of respondents.

The contactless payments They came in second as 64% of respondents said they used them frequently. The digital wallets ands Payments by QR code They were the preferred medium for 48% of the participants. Digital wallet users are projected to grow from 2.3 billion to 4 billion by 2024, meaning they would reach almost 50% of the world’s population.

“The key for the industry to take these numbers to the next level is understanding the needs, fears, and expectations of customers (current and potential) in order to design experiences that are easy to use and understand, and generate the trust and emotions necessary to motivate mass adoption, ”emphasized Lulo López, General Manager at Frog México.

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