Why cash remains a global constant in payments
Payments preferences are diversifying at a rapid pace, but there are still universal payment methods that underpin consumer habits. Cash is the most ubiquitous, even as consumers move online.
There is no doubt that regional payment preferences is a globally identifiable trend that, if anything, is becoming more pronounced as the payment industry evolves. And for both businesses with a physical presence and those that are online only, recognising this trend and developing a checkout strategy that aligns with the payment preferences of target consumers is imperative.
But that doesn’t mean there aren’t still methods that underpin payments across the world. The most universal of these is a preference, or even a reliance, on cash.
For many consumers, financial exclusion dictates usage. But personal preference is also a significant driving factor; for many, cash is seen as a more private or secure method of making transactions. For others, cash is viewed as a more reliable way of managing spending limits.
Of course, there are countries where consumer appetite for cash has diminished. China would perhaps be the most significant example of this; the growth of mobile payments in recent years has dramatically reduced the many communities’ dependency on cash. Even so, an estimated 80 billion cash transactions were completed in 2019, indicating physical currency still has a vital role to play in the eyes of Chinese consumers.
And even in Sweden, the country with the lowest dependency on cash in Europe, consumer appetite to go completely cashless isn’t evident at the moment. Despite the significant decrease in cash adoption in recent years, this trend appears to be bottoming out; cash in circulation in Sweden actually increased for the first time since 2007 in 2018.
The impact of COVID-19 on cash usage
And while in some ways the impact of COVID-19 has accelerated the digitisation of many services, including financial services, the appetite for cash during this period has been sustained and even increased in some areas.
Despite the increase in use of contactless payment methods since the outbreak of the pandemic, the growth of mobile wallets and contactless cards isn’t making people feel any less reliant on cash. According to data we compiled during the early stages of the pandemic for our latest research report Lost in Transaction: The impact of COVID-19 on consumer payment trends, half of all consumers (50%) think that cash is the most reliable form of payment in a crisis, and almost three quarters (72%) of consumers say that they would be worried if they could no longer access cash.
Cash is consistent
To illustrate the point is universal, let’s look at three further examples of countries with different profiles, that on the surface may appear to have different attitudes to payment methods, and specifically cash.
Two countries in Europe with contrasting perspectives are Bulgaria and Latvia. These two countries have very differently sized economies, but there are other points of disparity that might affect the way citizens choose to transact. Nevertheless, the appetite for cash is consistent.
According to some sources, Bulgaria has the second lowest percentage of adults with a bank account in Europe at 63%. So it is not surprising that the vast majority of transactions are completed using cash, although this percentage is falling.
This isn’t the case in Latvia, as over nine out of ten consumers have a bank account. However cash still remains prevalent, so much so that cash reserves accounted for 32% of all consumer savings in 2019, the highest percentage in the Eurozone and the fourth highest in Europe. Because of this, the majority of transactions in Latvia are still made using cash.
And if we think about consumers in a completely different geography with its own distinct culture by heading across to South America, a similar pattern emerges in relation to cash. In Mexico, again approximately 90% of all transactions are made in cash, and this is driven by the fact that half of all households do not have a bank account.
The acceleration of eCommerce and moving cash online
As we have already discussed, COVID-19 had accelerated the shift to digital services, and retail is no exception. According to our data 18% of consumers shopped online for the first time during the height of the COVID-19 pandemic, and this trend will continue. 38% of consumers told us that they would be shopping online more than they are now in the future even when COVID-19 is no longer factor.
But even though consumer spending habits might be shifting towards eCommerce, this doesn’t appear to be affecting their relationship with cash. In fact, 40% of consumers said that would shop online using cash if the checkout process was simple, and 36% of consumers said that they would shop online more if they were able to pay using cash.
For businesses that are already operating an online checkout, or that are planning to move online soon, it would be a mistake to think that consumers will change their payment preferences when they switch to eCommerce. Offering cash payments via an online checkout is a tangible competitive advantage when targeting these consumers.
Paysafecash is available in Bulgaria, Latvia, and Mexico. To find out more about Paysafecash and how it might benefit your business to accept cash payments online, contact us today.