A new study published by Experian, the global information services company, reveals that a third of the UK population (33%) believes credit and debit card payments will no longer be the preferred method of payment in 2020, as paying with a smartphone will take over.
The Banking Moving Forward study provides a valuable insight into what expectations individuals have of lenders and how they view the financial landscape. It examines how people bank now and how they expect to bank in the future, and is a useful guide when developing services that meet the needs of their customers.
The findings show that while cash and card payments still dominate, people believe that alternative methods of payment such as smartphones will become more widely used over the next five years. In this timeframe, 67 per cent of respondents feel cash will decrease in popularity, while two in five (41 per cent) think there will be a decline in the use of credit and debit cards as they currently are.
However the main reason smartphone payments are not currently the preferred method of payment is a fear of fraud. Almost half of people surveyed (46 per cent) fear their identity may be stolen online while 60 per cent of smartphone users said they had no malware protection on their devices, leaving them vulnerable to hacking by cyber fraudsters. Organisations that make it easier, while secure, for their customers to transact with them will have the most rewarding relationships.
When asked about how other forms of payment could fare, four in five (80 per cent) said that secure online payment platforms, such as, for example, PayPal, that let people shop using their debit card, credit card or bank account without sharing their financial details will become more popular by 2020.
Looking towards 2020, 14 per cent of the population believes that biometrics, such as retina or fingerprint scans, could also become commonplace and two in five (44 per cent) say they would be prepared to make payments via biometric scanning. A fifth (19 per cent) would consider paying for goods and services using voice authentication.
Derek Garriock, Head of Business Solutions, Experian UK and Ireland, explains: “People will certainly be faced with more choice in years to come with the payment methods and providers they choose. Their decision will ultimately be based on the ability to pay for something, securely, anywhere and at any time at their own ease and convenience.
“Security is a key concern for many individuals, who may be willing to adopt new ways of paying but have not yet done so, even amongst the younger generation. This is understandable considering that one in six adults has fallen victim to a cyber-attack via their mobile device.”