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The accelerated virtualization of the global payments sector in 2020

The events of 2020 have reset expectations and significantly accelerated several existing trends in the global payments sector. According to the calculations, global revenues in this sector declined by an estimated 11-13% by the end of the year. Overall, in retail, the impact was not a decline but a change in buying behaviour. The consumers spent more money online, which caused that the growth rate of online retail of this year increased six times. Many consumers, in particular older shoppers, turned to online shopping for the first time.

Most of the countries affected by the pandemic has reported an increase in share of debit-card spending mostly at the expense of cash. The fear of contracting through hightraffic ATMs and, in some cases, the refusal of merchants to accept cash (often despite legal obligations) leaded consumers towards electronic payment options to complete purchases. Furthermore, the ATM usage for example in the United Kingdom fell by 46% from March to July 2020. The pandemic has accelerated the move from physical to virtual banking. Banks are closing branches (or in some cases will not reopen branches they closed due to the pandemic), as well as ATMs. For instance, in Australia the top four banks have removed 2,150 ATM terminals and closed 175 bank branches since June.

The reduced use of cash may cause benefits for the banks overall. The cash-related costs of the banks are higher than their related revenues, while they make profit on the electronic payments.