Table of Contents
Executive Summary
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- The impact of COVID-19 on payment methods
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- Figure 1: Expected impact of COVID-19 on payment methods, short, medium and long term, 19 October 2020
- The market
- Economic contraction to hit spending, affecting payment method usage
- COVID-19 worries affecting payment and buying behaviour
- Card payments and credit transfers on the up, cheques in decline
- Who’s innovating?
- The consumer
- Debit cards (contactless) now the most used in-store payment method
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- Figure 2: Payment methods used in-store in the last month, NI and RoI, August 2020
- PayPal and debit cards most common methods for online payments
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- Figure 3: Payment methods used online in the last month, NI and RoI, August 2020
- Speed and security the priorities for low-value purchases
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- Figure 4: Most important factors ranked in order of importance when deciding which payment system to use for an everyday, lower-value purchase, RoI, August 2020
- Figure 5: Most important factors ranked in order of importance when deciding which payment system to use for an everyday, lower-value purchase, NI, August 2020
- Protection and security the priorities for high-value purchases
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- Figure 6: Most important factors ranked in order of importance when deciding which payment system to use for less frequent, high-value purchase, RoI, August 2020
- Figure 7: Most important factors ranked in order of importance when deciding which payment system to use for less frequent, high-value purchase, NI, August 2020
- More than a third of consumers always carry cash
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- Figure 8: How often consumers carry cash, NI and RoI, August 2020
- Consumers focused on security, and open to biometrics
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- Figure 9: Consumers’ payment behaviours, NI and RoI, August 2020
- Consumers not ready to jettison cash for new payment technologies yet
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- Figure 10: Attitudes towards payment methods, NI and RoI, August 2020
- What we think
Issues and Insights
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- The future might be cardless rather than cashless
- Consumers may now be ready for QR code payments
The Market – Key Takeaways
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- Economic contraction to hit spending, affecting payment method usage
- COVID-19 worries affecting payment and buying behaviour
- Card payments and credit transfers on the up, cheques in decline
Market Drivers
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- Short-, medium- and long-term impact of COVID-19 on payment methods
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- Figure 11: Expected impact of COVID-19 on payment methods, short, medium and long term, 19 October 2020
- Economic challenges almost certain to curtail consumer spending
- GDP in RoI expected to contract by 8.5% in 2020, with only partial recovery in 2021
- Impact of COVID-19 to hit NI economy with 7.5% contraction in 2020
- Consumers already feeling the financial effects of COVID-19
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- Figure 12: Consumer agreement with the question, ‘How has your financial situation changed since the start of the COVID-19 outbreak in your country?’, NI and RoI, September 2020
- Almost half are cutting back on non-essential spending due to COVID-19
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- Figure 13: Consumer agreement with the statement, ‘I am cutting back on non-essential spending since the start of the coronavirus/COVID-19 outbreak’, NI and RoI, September 2020
- Most consumers worried about risk of being exposed to COVID-19
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- Figure 14: Consumer agreement with the question, ‘How worried are you about the risk of being exposed to the coronavirus/COVID-19?’, NI and RoI, September 2020
- Half of all consumers have altered payment behaviour due to COVID-19
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- Figure 15: Agreement with the statement, ‘The COVID-19/coronavirus outbreak has changed my preferred payment methods’, NI and RoI, August 2020
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- Figure 16: Agreement with the statement, ‘The COVID-19/coronavirus outbreak has changed my preferred payment methods’, NI and RoI, by gender, age and social class, August 2020
- Most consumers believe the virus can be transmitted via cash
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- Figure 17: Agreement with the statement, ‘The COVID-19/coronavirus outbreak has highlighted hygiene issues with cash’, NI and RoI, August 2020
- Figure 18: Agreement with the statement, ‘The COVID-19/coronavirus outbreak has highlighted hygiene issues with cash’, NI and RoI, by gender, age and social class, August 2020
- COVID-19 having profound impact on consumers’ shopping behaviour
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- Figure 19: Agreement with selected statements relating to shopping and spending behaviour since the start of the COVID-19 outbreak, NI and RoI, September 2020
- Older consumers most inclined to limit time in-store and avoid use of cash
- Younger consumers more likely to use click-and-collect and shop online
- Steady growth in number of card payments by Irish consumers
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- Figure 20: Number of payments per capita, card payments, EU, RoI and UK (incl. NI), 2015-19
- Strong, steady growth in contactless payments
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- Figure 21: Contactless payments, volume, billions, UK (including NI), 2014-18
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- Figure 22: Contactless payments, volume, millions, RoI, Q4 2016-Q4 2018
- Irish consumers making 70-80 credit transfers per annum
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- Figure 23: Number of payments per capita, credit transfers, EU, RoI and UK (incl. NI), 2015-19
- E-payments still niche, but catching on
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- Figure 24: Number of payments per capita, e-payments, EU, RoI and UK (incl. NI), 2015-19
- Steady decline in cheque usage among all consumers
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- Figure 25: Number of payments per capita, cheques, EU, RoI and UK (incl. NI), 2015-19
Innovations – Key Takeaways
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- COVID-19 has altered consumer behaviour with using cash
- Companies encouraging alternative payment methods
- Klarna launch new initiative to tackle impulse buying
Launch Activity and Innovation
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- How has COVID-19 affected the way customers can pay in the UK and Ireland?
- COVID-19 could further reduce cash transactions
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- Figure 26: Research showing consumer opinions on a cashless society, UK, 2019
- New ways of making contactless payments to stay safe
- Companies working together to benefit consumers
- KOHO and Dialogue
- Virtually queueing for the supermarket
- Klarna launch “KlarnaSense”
- Vending machines with a twist
The Consumer – Key Takeaways
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- Debit cards (contactless) now the most used in-store payment method
- PayPal and debit cards most common methods for online payments
- Speed and security the priorities for low-value purchases
- Protection and security the priorities for high-value purchases
- More than a third of consumers always carry cash
- Consumers focused on security, and open to biometrics
- Consumers not ready to jettison cash for new payment technologies yet
Payment Methods Used In-Store
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- Cash no longer the preferred in-store payment method
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- Figure 27: Payment methods used in-store in the last month, NI and RoI, August 2020
- In-store cash usage declining steadily in recent years
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- Figure 28: Consumers who have used cash as a payment method in-store in the last month, NI and RoI, 2018-20
- Debit-card (contactless) usage increasing alongside declining cash usage
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- Figure 29: Consumers who have used debit cards (contactless) as a payment method in-store in the last month, NI and RoI, 2018-20
- Debit cards trump all other payment methods for in-store transactions
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- Figure 30: Payment methods used in-store in the last month, by category, NI and RoI, August 2020
- Older consumers, C2DEFs and those struggling using cash most
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- Figure 31: Consumers who have used cash as a payment method in-store in the last month, by generation, NI and RoI, 2020
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- Figure 32: Consumers who have used cash as a payment method in-store in the last month, by own assessment of financial situation, NI and RoI, 2020
- Debit card (contactless) now firmly a mainstream payment method
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- Figure 33: Consumers who have used debit cards (contactless) as a payment method in-store in the last month, by age, NI and RoI, 2020
- Figure 34: Consumers who have used debit cards (chip and PIN) as a payment method in-store in the last month, by generation, NI and RoI, 2020
- Credit cards
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- Figure 35: Consumers who have used credit cards (contactless) as a payment method in-store in the last month, by generation, NI and RoI, 2020
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- Figure 36: Consumers who have used credit cards (chip and PIN) as a payment method in-store in the last month, by age and social class, NI and RoI, 2020
- Older consumers unconvinced by e-payments
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- Figure 37: Consumers who have used payment service via smartphone/device (eg Apple Pay, PayPal) as a payment method in-store in the last month, by generation, NI and RoI, 2020
Payment Methods Used Online
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- PayPal and debit cards lead the way for online payments
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- Figure 38: Payment methods used online in the last month, NI and RoI, August 2020
- PayPal a mainstream payment method for consumers
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- Figure 39: Consumers who have used PayPal as a payment method online in the last month, by gender and social class, NI and RoI, August 2020
- Figure 40: Consumers who have used PayPal as a payment method online in the last month, by generation, NI and RoI, August 2020
- Debit cards a primary choice for consumers of all ages
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- Figure 41: Consumers who have used a debit card online in the last month, by generation, NI and RoI, August 2020
- Credit cards favoured by ABC1s and older consumers
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- Figure 42: Consumers who have used a credit card as a payment method online in the last month, by gender and age, NI and RoI, August 2020
- Figure 43: Consumers who have used a bank transfer as a payment method online in the last month, by social class, NI and RoI, August 2020
- Generation Z (NI) and Millennials (RoI) main users of bank transfers
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- Figure 44: Consumers who have used a bank transfer as a payment method online in the last month, by generation, NI and RoI, August 2020
Factors When Choosing Payment Method for Lower-value Purchases
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- Speed matters most to RoI consumers during low-value transactions
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- Figure 45: Most important factors ranked in order of importance when deciding which payment system to use for an everyday, lower-value purchase, RoI, August 2020
- NI consumers focused on security during low-value purchases
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- Figure 46: Most important factors ranked in order of importance when deciding which payment system to use for an everyday, lower-value purchase, NI, August 2020
- Protection and security matter most for high-value purchases
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- Figure 47: Most important factors ranked in order of importance when deciding which payment system to use for less frequent, high-value purchase, RoI, August 2020
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- Figure 48: Most important factors ranked in order of importance when deciding which payment system to use for less frequent, high-value purchase, NI, August 2020
How Often Do Consumers Carry Cash?
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- Almost two thirds of consumers always or mostly carry cash
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- Figure 49: How often consumers carry cash, NI and RoI, August 2020
- Men and older consumers most likely to always carry cash
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- Figure 50: How often consumers carry cash, by gender and age, RoI, August 2020
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- Figure 51: How often consumers carry cash, by gender and age, NI, August 2020
Consumers’ Payment Behaviours
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- Security is a higher priority than speed or convenience
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- Figure 52: Consumers’ payment behaviours, NI and RoI, August 2020
- Willingness to compromise speed for security across all demographics
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- Figure 53: Agreement with statement, ‘I would accept a slower checkout process (online or in-store) for enhanced security’, by gender, age and social class, NI and RoI, August 2020
- Men, younger consumers and ABC1s more open to biometric security
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- Figure 54: Agreement with statement, ‘I would be interested in using payment methods that incorporate biometric security (eg fingerprints)’, by gender, age and social class, NI and RoI, August 2020
- Uncertainty around sharing personal information with retailers
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- Figure 55: Agreement with statement, ‘I would be happy to provide more personal information at the checkout to get a more personalised service in the future’, by age, NI and RoI, August 2020
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- Figure 56: Agreement with statement, ‘I would be happy to provide more personal information at the checkout to get a more personalised service in the future’, by gender and social class, NI and RoI, August 2020
Consumer Attitudes Towards Payment Methods
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- Consumers cautious and conservative around payment methods
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- Figure 57: Attitudes towards payment methods, NI and RoI, August 2020
- Women and older consumers most inclined to see future role for cash
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- Figure 58: Agreement with the statement, ‘There will always be a need for cash’, by gender and age, NI and RoI, August 2020
- ...which are also the demographics that value being able to pay bills in post office
- Concern that new technologies reduce spending inhibitions
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- Figure 59: Agreement with the statement, ‘New payment technologies (eg. contactless, digital credit) make it too easy to spend money’, by gender, age and social class, NI and RoI, August 2020
- ...which perhaps explains interest in being able to set own limits
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- Figure 60: Agreement with the statement, ‘Setting your own transaction limit on contactless payments would be useful’, by age, NI and RoI, August 2020
- Almost half 18-24s put off by too many security checks
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- Figure 61: Agreement with the statement, ‘Too many security checks when shopping online is off-putting’, by age, NI and RoI, August 2020
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- Figure 62: Agreement with the statement, ‘Too many security checks when shopping online is off-putting’, by gender and social class, NI and RoI, August 2020
Appendix – Data Sources, Abbreviations and Supporting Information
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- Data sources
- Abbreviations
- Consumer research methodology
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