The Changing Future of Payments: the Challenge of Digital Inclusion

Post-COVID we have reached a crucial new stage in the development of payment practices in Europe. COVID has played a decisive role in the emergence of electronic transactions. According to the "Study on the payment attitudes of consumers in the euro area" (SPACE 2022), a report based on data collected in 17 euro area countries between October and December 2021 and presented by the European Central Bank (ECB) at the end of December 2022, payment cards now account for the largest share of transactions in Europe: 46%, compared with 42% for cash. This implies that cash will still be used, but mainly for low-value local transactions.

Contrast this with the figures observed in 2016 and 2019 when the proportion of cash transactions was greater than that of card transactions by value (54% compared with 39% in 2016 and 47% compared with 43% in 2019). We are now entering a new stage in the transition to electronic transactions for European consumers. The most notable successes include the contactless payment card, which passed the 50 euro threshold in France in July 2024 as a result of the gradual roll-out of Cartes Bancaires CB's "Contactless +" initiative, and the digital wallet, which has developed rapidly in Spain with Bizum (24 million users) and in Portugal with MB Way (5 million users). These facts confirm that the European payments market has entered a new chapter in its history, one characterised by the development of electronic usage.

Cash, a key factor in inclusion

Despite this growth, some consumers are still not using electronic payments for reasons ranging from generational issues to economic uncertainties and general reluctance. This trend, which is common to all European countries - including those that are traditionally more mature in terms of digital technology, such as Luxembourg and Sweden - explains why, despite the desire to develop electronic payments - considered to be more secure - it is important to retain a reliable cash payment system for consumers.

One of the consumer groups most affected by digital exclusion is older adults. These people have spent most of their lives without the internet and may feel overwhelmed by digital applications, including those related to payments. But that's not the whole story. In addition to these population groups, there are also consumers with disabilities and vulnerable or marginalised groups who do not have the means to acquire the tools necessary for digital use (such as smartphones) or who are excluded from using traditional financial channels. Finally, we must remember those who are reluctant to embrace digital technology. These people are able to carry out electronic transactions but resist the idea of moving to digital payments for various reasons, ranging from fears about security to concerns about the environment or privacy. So, how do we get these people involved in moving to electronic payments?

Targeted support

One thing is clear: payment professionals are all aware of this reality. They are incorporating the issue of digital inclusion into their thinking as an essential factor in the development of the market. Among the concerns raised within the European payments ecosystem is the impossibility of envisaging "all-electronic" payments while maintaining access to cash still guarantees inclusion. A further prerequisite is the need to provide specific support for such customers. Examples in the news include the measures taken by certain financial institutions to provide specific support for older people and the work of the French payment ecosystem to ensure that payment methods are accessible to people with disabilities in light of the forthcoming entry into force of the European directive on accessibility.

Digital inclusion: a "shared responsibility"

All players in the payments market are strongly committed to digital inclusion and believe that it is not a matter for one type of stakeholder in particular but a "shared responsibility". It is a "shared responsibility", which means that all professionals involved in the market have a role to play. From a forward-looking perspective, ongoing discussions are focusing, in particular, on the need to incorporate the issue of digital inclusion right from the start and design payment methods based on the principle of inclusion by design rather than identifying alternatives after the event. Consideration should also be given to the role that public authorities can play here as facilitators of genuine political commitment to the issue. Finally, cooperation between Member States is also necessary in a fundamentally pan-European payments ecosystem. Digital inclusion is certainly addressed by all national ecosystems, but in relatively different ways, depending on the economic, political and sociological realities of the individual European countries.

Written by Andréa TOUCINHO, Director of studies, prospective and training, Partelya Consulting.