Great changes were seen in financial cards and payments during 2020. Coronavirus (COVID-19) has significantly accelerated the move away from cash, as consumers and retailers tried to avoid handling it, providing strong impetus for contactless payments, widely seen as the most hygienic means of paying for goods. 2020 has also seen further strong growth in e-commerce, with consumers locked down for extended periods in their homes or trying to avoid public places during the pandemic.
The COVID-19 pandemic had a major impact in 2020, with consumer payments seeing their first significant decline since 2009, when the after-effects of the 2008 financial crisis were still being felt. As all parties looked to avoid cash and embrace card or, where possible, contactless payments, m-commerce continued to boom, while cards and, in particular, electronic direct/ACH transactions performed better than paper payment transactions.
Debit transaction value declined at a much slower rate than credit in Western Europe in 2020. In the rise of contactless payments, debit cards are generally preferred for replacing small-value cash purchases. In addition, in 2020, due to the economic impact of the measures to contain the pandemic, consumers were also a little more reluctant than usual to rack up more credit on their cards and were also generally eschewing big-ticket items for more essential goods.
The dynamic growth of m-commerce continues unabated in Western Europe, driven by the rise of contactless mobile payments and the increasing use of the smartphone as a shopping device. While some countries, such as Sweden or the UK are particularly advanced in this area, adoption even in cash-dominant countries is accelerating, with further impetus provided by the pandemic.
Europe’s payment landscape has seen significant changes to its regulatory framework with the introduction of the Revised European Payment Services Directive, which came into full effect in September 2019. The consequent introduction of open banking and the emergence of instant payments, is driving the development of innovative and potentially disruptive payment solutions.
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