Non-cash payments across both the US and UK will soar over the next 10 years, with the value of cashless transactions in the US reaching US$46 trillion by 2026 and £1.44 trillion (US$1.82trn) in the UK, according to global law firm Paul Hastings.
The firm’s research, carried out with the Centre for Economics & Business Research (CEBR) and UK-headquartered market researcher YouGov, suggests that 76% of all transactions will be non-cash in the US by 2026 and 68% in the UK
The projected figures would mean a 36% increase in the US on 2016’s figure of US$33 trillion, with there being 221m contactless mobile payment users within a decade. In the UK, it represents a 26% increase on 2016’s figure of £1.14 trillion, with there being 19.1bn contactless transactions per year within a decade.
The research by Paul Hastings, the CEBR and YouGov, examined current attitudes of businesses and consumers towards alternative payments and their potential use of future payment methods.
Further 2026 forecasts from the UK research include:
- US: 76% of all transactions will be non-cash transactions, up from 63% today; UK: 68% of all transactions will be non-cash transactions, up from 55% today.
- US: 82% of businesses will accept alternative payment methods; UK: 74% of businesses will accept alternative payment methods
The findings are contained within the Paul Hastings report ‘The Future of Payments’. The report compares the landscape in the UK and the US, two leading jurisdictions for the payments sector, highlighting many similarities and several striking differences, such as the significantly more favourable regulatory environment in the UK and European Union (EU).
The research also identified the biggest barriers to growth of payment technology, with 48% of US consumers and 53% in the UK choosing a reduced risk of fraud as the feature they would most like to see in alternative payment methods-more so than accessibility, customer service or competitive rates of interest.
“The challenge for payment service providers is to create reasons for consumers to use new methods and technologies to make payments,” said Thomas Brown, partner global banking and payment systems practice at Paul Hastings’ San Francisco office.
“As things stand, consumers see little value in changing how they make payments in most environments apart from novelty value and the gratification of being an ‘early adopter’.”
Ben Regnard-Weinrabe, partner in the global banking and payment systems practice at Paul Hastings’ London office, said: “We have a fantastic array of new payment methods at our fingertips, whereas once the options were limited to cash, cheques, card, and bank transfer.
“You can leave your payment card at home, and pay contactless through Android, Samsung or Apple Pay; if you shop online you may use PayPal, paysafecard or Zapp instead of to MasterCard or Visa; if you want an alternative to your mobile banking app, perhaps you’ll use Money Dashboard or Mint; and for electronic payments that are just like paying by cash – instant and anonymous – bitcoin and other emerging digital currencies are an option.”
Brown added: “Obviously contactless cards can save time compared to chip and pin credit cards, and the benefits of all methods over cash and cheques are clear, but consumers do not yet see the benefits of more advanced forms of payment.
“Other rapidly adopted new technologies – Airbnb, Uber, and Spotify for example – have obvious advantages in cost, convenience, or human engagement. Payment methods don’t appear to have enough of the same advantages.”
Regnard-Weinrabe concluded: “Nonetheless, as this paper shows, there are still challenges to the success and adoption of emerging payment methods.
“They include a need to continue building customer trust in new technologies, and a regulatory framework that is having to respond fast to the changing dynamics of the market and emerging cybersecurity threats in a way that, hopefully, will not have a detrimental effect on the user experience or impose unnecessary barriers to new entrants.”
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