Paying for goods and services has increasingly moved from cash and coins to digital and mobile methods, and while this shift will only continue, security is a big concern for consumers, according to new research from UK-based payments company Paysafe Group.
Currently, approximately one in five Canadians don’t regularly carry cash, and more than half of the country believes they will no longer be using cash at all for their shopping within the next two years.
Leading the charge are millennials, which should come as no surprise. A quarter of Canadians between the ages of 18 and 34 don’t carry cash frequently, which is a higher number than those of the same age group in both the US and UK.
While Canadians are often seen as more conservative, or even wary, in adopting new technology, 71 per cent believe that contactless payment (“tapping” your card”) is a quicker and more convenient payment method.
However, 64 per cent of Canadians worry about how secure contactless payments really are, and the conservative nature of Canadians is highlighted in how slow Canadian consumers are in adopting cryptocurrencies and mobile wallets compared to those in the US and UK. Only 9 per cent of Canadians have tried using cryptocurrencies and more than a quarter do not even want to take out their mobile phone to pay.
Daniel Kornitzer, Paysafe’s chief product officer, tells IT World Canada that this caution shouldn’t be too worrying.
“As consumers get more comfortable with new innovations, they’ll feel encouraged to try them out,” says. “That said, most expect to pay using the method they prefer right now. For this reason, merchants need to offer a wide range of payment options — including cash alternatives — if they’re to stay relevant and accessible to as wide a customer base as possible.”
How can merchants and banks prepare for a digital payment future?
More importantly, though, are questions of how merchants, banks, and other institutions that handle money can keep up with this digital shift and be prepared for the inevitable security risks.
Kornitzer emphasizes that balancing this need for satisfying consumer convenience while also maintaining strong security measures to protect against fraud and cyberattacks won’t be easy, given how challenging it is right now for them to even keep up with emerging technologies – how can they prepare for a future where the next innovation is unknown?
“Merchants need to embrace that payments are part of the broader customer experience. Increasingly, consumers want a payments experience that’s largely consistent across all the shopping channels they use today and may develop tomorrow,” he explains. “The broader, deeper insight that current digital payments can provide give merchants a wealth of data to anticipate what’s next. That means better information about exactly how and where customers want to pay, what the drivers and barriers to successful transactions really are and better predictive tools for anticipating trends.”
Banks, too, will need to adapt. Despite the financial sector not being known as quick to innovate or adopt new technologies, the rising number of fintech startups in Canada have “paved the way in showing that compliance and speed aren’t mutually exclusive,” which has influenced traditional banks and service providers, Kornitzer continues.
“History has shown banks to have a low tolerance for risk (and rightly so), but in the past few years, banks have been catching up with the digitization of payment technologies. It’s no longer ground-breaking to have a mobile app; consumers expect it and many banks have entered the digital age out of necessity to remain competitive,” Kornitzer concludes. “As an emerging trend, banks are also often partnering with fintech companies to accelerate the time-to-market of their new products and services. With more than 51 per cent of Canadian consumers expecting to abandon cash by 2020, banks that embrace the need to innovate – while maintaining laser focus on consumer confidence – will be able to adapt faster as new technology is released.”