Digital payments are growing all across the world – but just not in the same way. From one country to the next, the types and use cases of digital payments have grown up in different ways.
Take the US, for example: contactless payments represent a huge opportunity for growth over the coming years. Consultants AT Kearney last year found that just 0.18 per cent of point-of-sale transactions in the US involved contactless cards, thanks to banks' relatively low levels of issuance of cards with NFC chips onboard. However, momentum is building and the company predicts that by 2022, half of all bank cards will be contactless, with an extra 4.6 billion payments made using tap-and-go. The change will be driven by major banks starting to issue customers with contactless-enabled cards, as well as contactless functionality rolling out on public transport systems.
Elsewhere, mobile payments are having a major impact. The two biggest mobile payment platforms are both in China, where WeChat and Alipay have each notched up one billion plus users. A sizeable number are active users too: WeChat Pay saw more than 823 million users send or receive money over Chinese New Year. Cash still has its place in the country, however: China remains the world's largest market for ATMs – but the number is declining, down nearly seven per cent between 2017 and 2018.
South Korea can't match China for user numbers, but the reach of its mobile payments services is just as impressive: around half of all South Koreans use KakaoPay, a five-year-old mobile payment service linked to popular messenger service, KakaoTalk. KakaoPay allows users to make credit card and mobile payments with a single password, as well as make wire transfers to banks and pay bills. During 2018, KakaoPay processed 20 trillion won of transactions. It launched its own app earlier this year, adding a range of new financial services, such as insurance.
Despite advances elsewhere, Sweden is set to be the world’s first cashless country. From 2010 to 2018, the percentage of Swedes paying in cash dropped from 40 per cent to 13 per cent, and cash withdrawals are falling too: 20 per cent of Swedes say they don't withdraw cash from ATMs or banks, while 60 per cent say they never get cashback in shops. According to some predictions, cash could become extinct in the country as soon as 2023.
Latin America, meanwhile, is a region that depends largely on cash, though digital payments are also on the rise. Beyond hard currency, credit card spending is a major characteristic of the region, accounting for nearly 45 per cent of all non-cash spend. The region's higher use of credit cards is in part thanks to local banks' use of instalment payment options, where purchases made on credit card can be paid off in a number of chunks rather than settling the bill up front.
Latin America is also reported to be one of the biggest users of cryptocurrency, playing host to five countries, including Brazil and Columbia, where crypto is thought to be held by double digits of citizens. Venezuela, meanwhile, where hyperinflation is a problem, has launched its own state-backed cryptocurrency to encourage Venezuelans working abroad to send cash back home.
While Venezuela is one of the first countries to launch its own cryptocurrency, it isn’t the only one: Iceland has officially allowed its currency to be used as electronic money over blockchain. Sweden, meanwhile, is investigating the potential of an e-Krona, while China, Iran, and Russia are also thought to be among those looking at a state-backed cryptocurrency.
In Russia, digital wallets are a popular means of payment. Google Pay, Apple Pay and Samsung Pay are already seeing double digit take-up among consumers, while homegrown equivalents are also doing well: Yandex.Money is thought to be the largest digital wallet service in the country with 46 million users. E-wallets are used by around 90 per cent of Russians aged 12 to 55, almost the same percentage as those that use bank cards.
Africa remains the leader for mobile money, with nearly 400 million users in Sub Saharan Africa. Ghana is one of the biggest users in the continent, while in Kenya, which arguably kicked off the mobile money boom, mobile money transactions are around half of all gross domestic product. At the tail end of 2018, mobile trade body the GSMA, along with local operators MTN and Orange, launched a service called Mowali to make mobile payments interoperable across the continent.