Card Payments Rule the Retail Roost: annual growth of 1.7% Projected Through 2024
Retail sector sees steady expansion of card-based transactions following study findings - Retail sector's ongoing trend: Expansion of card payments in transactions
The cash-strapped days of retail may be numbered according to a new study from the Cologne-based retail research institute EHI, as card payment methods continue to surpass their traditional counterparts in retail transactions. Card payments made up a staggering 63.5% of retail sales in 2024, a 1.7% increase from the previous year, totaling a hefty 495 billion euros.
By comparison, cash accounted for a mere 33.8% of retail sales in 2024. The remaining shares are primarily attributed to financing and invoice purchases as well as vouchers.
In the pre-Coronavirus year of 2019, cash still held the majority of the market, accounting for more than 46% of transactions. However, the pandemic seems to have accelerated the shift towards digital payment methods.
While cash remains the most popular payment method by number of transactions, amounting to over half (54.6%) of the approximately 20 billion transactions in 2024, this figure represents a dip compared to the 82.3% of transactions in 2019 when cash was king.
In 2024, the value of these transactions is projected to have reached pre-pandemic levels, suggesting a 3.4% growth year-over-year. The study demonstrates that an impressive 44.3% of transactions were made via card in 2024, more than double the share in 2019 when it stood at just 19.7%.
The Girocard remains the undisputed market leader in card payments. Nevertheless, consumers are increasingly opting for mobile payment processes via smartphones or smartwatches. More than one eighth (12.9%) of all card-based payment processes are now executed this way, such as through Apple Pay or Google Pay. This represents a sizable year-over-year increase from the 7.5% recorded in 2023.
The total volume of cash withdrawals during the same timeframe grew by about 10% year-over-year to reach 13.57 billion euros.
The EHI study evaluated data from 499 companies, encompassing around 100,000 businesses from 35 sectors with a combined gross turnover of 314.8 billion euros.
Observations and Trends
- The increase in the use of card payments in retail corresponds to global trends influenced by changing consumer behaviour, technological adoption, and expanding digital commerce.
- Responding to consumer preferences for convenience, security, and speed, prepaid cards are gaining traction, projected to more than double in value from 2024 to 2030.
- The adoption of virtual cards, driven by enhanced security and integration with AI and blockchain technologies, is on an upward trajectory.
- E-commerce and mobile commerce growth, particularly in Asia-Pacific markets, is accelerating the move towards digital payments.
- M-commerce is seeing the most significant growth, with mobile payment processes via smartphones and smartwatches on the rise.
- The shift towards card payments has been bolstered by improvements in payment security, efficiency, and integration with e-commerce platforms and marketplaces.
- Middle classes in countries like China, Vietnam, and Thailand are driving card payment adoption in local and cross-border transactions.
- Increased acceptance of card payments by retailers, particularly in emerging markets, is supporting the growth of card transactions.
- Prepaid, virtual, and B2B card payments exhibit particularly rapid growth, reflecting evolving use cases and the broadening scope of card-based payments beyond traditional consumer credit uses.
- The community policy could consider the rising trend of card payments in retail businesses, particularly those related to vocational training programs as a potential avenue for finance and business development.
- In light of the continued growth of card payments, there may be an opportunity for vocational training institutions to offer prepaid cards to students, which are projected to more than double in value from 2024 to 2030.
- The shift towards digital payment methods, such as card payments, should also be incorporated into the curriculum of vocational training programs in technology, finance, and business sectors in preparation for the upcoming years, such as 2023.
- The increasing adoption of mobile payment processes for card-based transactions, like Apple Pay or Google Pay, could be a topic of interest in vocational training courses, given the sizable year-over-year increase from 2023 to 2024.
