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Tapping To The Beat of a Contactless Payment Drum

Contactless payments remain the preference of consumers as the migration away from paper-based transactions continues.

Over half of card payment purchases were contactless in 2021 as cheques and cash continued to fall in popularity with consumers and businesses.

The Banking and Payment Federation of Ireland’s (BPFI) latest Payment Monitor report for Q4 2021 reveals that over a third of all in-store spending is now contactless. This figure includes mobile wallets with the value of contactless payments jumping from just over €9 billion in 2020 to €13.6 billion last year, continuing contactless’ upward trend.

In the final quarter of 2021, people tapped over a quarter of a billion times – 110 million more times than during the same period in 2019.

Consolidation of Contactless Payments and its Impact on Spending

The report evidences how pandemic purchasing habits from strict lockdowns in 2020 and early 2021 are now purchasing routines and aligns with BOI Payment Acceptance (BOIPA) own findings.

Contactless climb continues

Analysis from our customer data found that the percentage of contactless transactions continued to rise steadily over the first three quarters of last year, moving closer to 80% of POS transactions by September.

Contactless payments had averaged at just over 50%  before the pandemic at the start of 2020 and the rise of its usage can be linked to an increase in how much a customer spends on an average transaction.

Increase in average transaction values

BOIPA also noted a steep increase in the average transaction value (ATV) on contactless transactions at the beginning of the pandemic with an increase of 25% when comparing March and April 2020 moving from €12.7 to €15.8, aided by the contactless limit increase to €50 on cards that April.

This increase has continued to rise, averaging at €16.4 by the end of Q3 2021

Paper-based payments continue their decline

2021 also laid-bare consumers and businesses step-change away from cheque and cash transactions with ATM withdrawals, which indicate the use of cash to pay for goods and services, falling to €12.7 billion in 2021, having reached an all-time high of €19.9 billion in 2018.

Cheques continue to bounce out of favour

Use of cheques once again are the big loser in BPFI’s payment monitors’ report with their consistent fall from consumer grace continuing as annual volumes dropped from over almost 47 million in 2016 to just over 20 million last year.

This annual fall in the volume of cheques has been consistent with their sharpest decrease of almost 8 million occurring in 2020. Last year’s usage was down 14.7% when compared to 2020 with the volume of digital payments 85% higher by comparison.

Digital payment options and electronic channels drive cashless change

Brian Hayes, Chief Executive at BPFI sees the accelerated trend we’ve seen towards cashless transactions since March 2020 remaining with “a long-lasting shift in the use of digital channels and electronic payments.”

And BOIPA’s Managing Director, Brian Cleary is in full agreement with that view. “There is no doubt over the last eight years that the once undisputed position of cash as the preferred legal tender is long passed with the rise of card and digital payment options,” Cleary states.

Businesses have adapted and added to their payment experience to meet and support the payment needs of their customers, with a wide range of physical and virtual payment options options now available for all businesses of all types and sizes.

For consumers the increased use of digital wallets, which has no contactless limit given the built-in additional security features on wearable devices, will continue this trend away from cash, as well as the use of physical debit and credit cards.

The popularity of person-to-person payment apps, like Revolut, and digital banking, which jumped by approximately 10% last year, will continue this journey.

Payment trends offer businesses clarity

The trends from the latest BPFI’s report indicating the consolidation of card, contactless and digital payments is a welcome development for all business owners and companies.

Given the uncertainty and challenges businesses will likely face over the coming year, with supply chain issues, the rising cost of supplies, materials and shipping and staffing shortages, documented evidence on how customers are likely to continuing paying for goods and services offers guidance.

While bricks and mortar businesses will have concerns about the role of the physical store with the growing popularity and familiarity of online shopping, knowing how consumers will spend offers an insight and platform for business owners on how to accommodate and support their customers.


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