Payments Optimisation

Digital Wallets are supporting the drive to a true cashless society


Merchants who are expanding internationally should keep an eye on how the move away from cash is changing the way customers pay for goods online. In particular, this trend could potentially lead to expect to see an increase in card payments made through digital wallets such as Apple Pay and Google Pay.

In 1661, Sweden was the first country in Europe to introduce banknotes.1 Now Sweden is a pioneer again, with the country on course to become one the first cashless societies. According to recent research,2 this could happen as early as 2023. Coins and banknotes have been prohibited on buses for a number of years,3 and in addition, Sweden is developing a government-created cryptocurrency, the world’s first. A pilot scheme to create the state-backed ‘e-krona’ was launched 2019.4

Unsurprisingly, e-commerce is also almost entirely digital in Sweden, with only 1% of transactions settled with cash.5 And there would appear to be no going back – cash use is predicted to plummet at a compound annual growth rate of -35.1 percent to 2021.6 When it comes to e-commerce, the Nordics is the most cashless region out of those covered by J.P. Morgan’s Global Payments Trends Reports. This is a reflection of the high degree of technology adoption, as well as strong trust in financial institutions.

Cashless culture could influence how your business accepts payments

As other countries follow this trend, merchants will need to make sure they support a range of payment options. Cards will be the most likely beneficiary from the move away from cash but digital wallets are also becoming more widespread, as are other payments methods. In Sweden open invoicing is particularly popular and the country is the home of Klarna, a buy-now-pay-later online payment option that has spread across Europe.7

“PayPal and Apple’s publicly reported growth rates suggest that both could potentially be gaining consumer preference and merchant adoption. Digital Wallets directly address consumer security and help push toward a true cashless society,” says Brian Gaynor, Executive Director, Head of Product and Strategy Solutions at J.P. Morgan Merchant Services in Europe.

“For example, PayPal holds my card data centrally and keeps me from having to trust multiple ecommerce sites or apps with my full primary account number. Apple Pay does the same.”

Given these cultural shifts, merchants and regulators will need to work hard to reassure customers about payment security. A long standing distrust of electronic forms of cash is one reason that 8% of e-commerce payments in Italy are still completed in hard currency. 8

In fact, the government recently backed ‘No Cash Day’, an annual event designed to break down distrust of credit and debit payments. In Japan, cash also carries a cultural perception of offering security and anonymity when making payments,9 which is one reason why it still accounts for 13% of e-commerce payments.10

India’s banknote demonetisation is driving change in one of the world’s biggest e-commerce growth markets

India's demonetisation of the higher-value Rs500 and Rs1000 bank notes has been designed to reduce corruption and encourage citizens to adopt digitised forms of payment.11 This has affected the number of merchants accepting cash on delivery. Major players like Amazon, Flipkart and BigBasket have all limited or removed this payment option.12 As a result, the use of cash for e-commerce is set to fall from 17% of the market to 10% by 2021.13

Another country seeing major drops in cash usage is Singapore. In this advanced and digitally-savvy country, cash is used in just five percent of transactions, a figure projected to decline to two percent by 2021.14 Like many countries with low cash usage, card payments dominate in Singapore.15

Three takeaways for e-commerce merchants monitoring cashless growth:

  1. Card and digital wallet payments are growing in countries where cash use is falling.
  2. The cashless trend is not universal and some cultures are still using cash at significant levels so merchants are recommend to take a country-by-country approach when exploring payment methods.
  3. Digital wallets can help to ease security fears for those consumers who may still view cash as a form of protection from cyber fraud.

To learn more about digital wallets such as Apple Pay and Google Pay, mobile commerce developments and expanding your e-commerce business internationally, contact your J.P. Morgan representative or call our merchant support team on:

Europe: +353 1 726 2909

UK: +44 845 399 1130

Develop a fraud management lifecycle

• Use managed machine learning as much as possible through all stages of your fraud management lifecycle.

• Follow our four-step process to try and increase revenue from your e-commerce payments flows while minimising customer friction in your check-out experience.

1. Riksbank.se. ‘1661 - First banknotes in Europe.’ Accessed September 2019.
2. Knowledge@Wharton, 2018. ‘Going Cashless: What Can We Learn from Sweden’s Experience?’ Accessed September 2019.
3. Guardian, June 2016. ‘Sweden leads the race to become cashless society.’ Accessed December 2017.
4. Riksbank.se, October 2018. ‘E-krona project, report 2.’ Accessed November 2018.
5. J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
6. J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
7. Klarna.com, 2019. ‘About Us.’ Accessed March 2019.
8. J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
9. ThePaypers.com, February 2018. ‘Payment methods and practices in Japan.’ Accessed March 2019.
10. J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2019.
11. TheHinduBusinessLine.com, January 2018. ‘E-commerce players stop cash-on-delivery payment option temporarily.’ Accessed February 2019.
12. TheHinduBusinessLine.com, January 2018. ‘E-commerce players stop cash-on-delivery payment option temporarily.’ Accessed February 2019.
13. J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
14. J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.
15. J.P. Morgan 2019 Payments Trends – Global Insights Report: Data has been provided to J.P. Morgan Merchant Services by Edgar, Dunn and Company, 2018.

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Contact us if you require advice, help or support.

Existing Merchant Service Customers

If you have a technical issue or a question about your merchant account, please call your Relationship Manager directly.
Alternatively, call our merchant support team on:

For Europe: +353 1 726 2909     UK: 0845 399 1130

Further information is available at any time through your Paymentech Online account.

 

Out of Courts Complaints and Redress Procedures

  1. Paymentech has in place complaint resolution procedures to settle complaints of Merchants arising from their rights and obligations under Parts 3 and 4 of the Payment Services Regulations 2018.
  2. If you have a complaint, please contact your Relationship Manager. Your complaint will be addressed in accordance with CPEL complaint policy, which we are happy to provide upon request.
  3. Alternatively, in the event of a complaint, a Merchant may refer the matter to the Irish Financial Services and Pensions Ombudsman or such relevant out-of-court complaint body or to such other competent out-of-court complaint body applicable to you in the country where you are established.
  4. You can contact the Financial Services and Pensions Ombudsman at:

Lincoln House,
Lincoln Place,
Dublin 2,
D02 VH29,
Ireland
Tel: + 353 1 567 7000
Email: info@fspo.ie
Website: https://www.fspo.ie