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Payment Methods: Online vs. Offline - Ireland - July 2016

Published By :

Mintel

Published Date : Aug 2016

Category :

Banking

No. of Pages : N/A

Compared to less than a decade ago when cash was the preferred method of payment among Irish consumers, the Irish payments industry has changed dramatically. Non-cash methods of payment have become increasingly popular - most notably debit cards, which have now far surpassed credit cards as consumers' favourite form of plastic payment card. While cheques are not nearly as significant as they once were, they remain an important (albeit niche) method of payment

Table of Content

Overview

What you need to know
Issues covered in this report

Executive Summary

Current state of the payments sector
Decline of cash as most popular payment method
Cheques no longer as important as they once were – but still have a role
Debit cards the number one form of plastic payment option
Debit cards forecast to be most common payment method by 2021 in UK (including NI)
Market factors
Online access at all-time high among Irish consumers
Social network-use now a mainstream activity among Irish consumers
Smartphone ownership nearing 90% among Irish consumers
Key players and innovations
The consumer
Cash remains Irish consumers' preferred payment method
Figure 1: Types of payment methods used by consumers (offline and online) in the last month, NI and RoI, April 2016
Expectation of cashless society – but cash-attachment remains strong
Figure 2: Attitudes towards cash and cheques, NI and RoI, April 2016
Around four in 10 making more use of contactless payments
Figure 3: Agreement with statements relating to contactless payments, NI and RoI, April 2016
Consumers want protection, and are willing to play their part
Figure 4: Attitudes towards selected statements relating to security, NI and RoI, April 2016
Consumers uncertain about advanced payments-related technology
Figure 5: Agreement with statements relating to new payment-related technology, NI and RoI, April 2016
What it means

Issues and Insights

Need to provide consumers with alternative budgeting tools
The facts
The implications
Evolution rather than revolution best suits the payment industry
The facts
The implications
Security remains a fundamental issue for consumers
The facts
The implications

The Market – What You Need to Know

Online access at all-time high among Irish consumers
Social network shows potential for payment platforms
Smartphone ownership nearing 90% among Irish consumers

Current State of the Payments Sector

Dependence on cash slowly declining in NI and RoI
Figure 6: ATM cash withdrawals, by volume (millions) and value (€ billion), RoI, 2005-14
Figure 7: Number of cash withdrawals from ATMs, millions, UK (including NI), 2001-14
The era of cheques is not coming to the end just yet
Figure 8: Volume (millions) and value (€ billions) of cheques processed, RoI, 2005-14
Figure 9: Volume (millions) and value (£ billions) of cheques processed, UK (including NI), 2013-16*
Debit cards now established as dominant plastic payment option
Figure 10: Volume of card payments, debit and credit, millions, RoI, 2005-14
Figure 11: Value of card payments, debit and credit, € billions, RoI, 2005-14
Figure 12: Volume of card purchases, debit and credit, millions, UK (including NI), 2009-15
Figure 13: Value of card purchases, debit and credit, £ billions, UK (including NI), 2009-15
Popularity of contactless payments adding to debit cards' dominance in UK (including NI)
Debit cards on course to be most common payment method by 2021
Figure 14: Average monthly payments by UK (including NI) consumers, actual and forecast, 2015 and 2025

Market Drivers

More Irish consumers are online than ever before
Figure 15: Internet take-up, NI, 2010-15
Figure 16: Households with internet access, RoI, 2009-15
Vast majority have fixed or mobile broadband
Figure 17: Households with internet access classified by type of internet access, RoI, 2015
Majority of consumers using social networks on regular basis
Figure 18: Social networks that consumers log on to regularly (ie log on to at least once per week), NI and RoI, April 2016
Around half of all consumers using at least one messaging app
Figure 19: Messenger apps that consumers log on to regularly (ie log on to at least once per week), NI and RoI, April 2016
Almost nine in 10 Irish consumers now own smartphones
Figure 20: Ownership of or access to mobile technology devices, May 2015-April 2016
Cheques' days may not be numbered after all

Competitive Strategies and Innovations – What You Need to Know

PayPal launches PayPal Credit
Apple Pay expands into e-commerce
Google launches Android Pay
Visa explores biometrics to enhance security of online payments
Barclays expands bPay range with bPay Loop
ABN AMRO and Tikki enable payments using Whatsapp

Who’s Innovating?

Morpho teams up with Visa to develop biometric authentication
Barclays expands its contactless wearables range
ABN AMRO enables payments via Whatsapp

Competitive Strategies

PayPal
Key facts
Competitive strategy
Apple Pay
Key facts
Competitive strategy
Android Pay
Key facts
Competitive strategy
Bitcoin
Key facts
Competitive strategy

The Consumer – What You Need to Know

Cash remains Irish consumers' preferred payment method
Debit cards a close second in terms of preferred method
Credit card usage significantly behind debit card usage
Consumers not ready to jettison cheques just yet
Direct debits, standing orders and transfers all established methods
PayPal dominating alternative payment methods
Expectation of cashless society – but cash-attachment remains strong
Around four in 10 making more use of contactless payments
Consumers want protection, and are willing to play part
Consumers uncertain about advanced payments-related technology

The Consumer – Types of Payment Methods Used

Cash is still king when it comes to preferred methods of payment
Figure 21: Types of payment methods used by consumers (offline and online) in the last month, NI and RoI, April 2016
Cash the most 'democratic' of payment methods – used by all consumers
Figure 22: Consumers who have used cash as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
Debit cards a close second in terms of preferred method
Figure 23: Consumers who have used debit cards (chip & PIN, online and contactless) as a payment method in the last month, NI and RoI, April 2016
Chip & PIN debit card use common across all demographics
Figure 24: Consumers who have used a debit card (chip & PIN) as a payment method in the last month, by gender and age, NI and RoI, April 2016
Use of debit cards online peaks among younger consumers
Figure 25: Consumers who have used a debit card (online) as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
ABC1s most inclined to use contactless debit cards
Figure 26: Consumers who have used a contactless debit card as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
Credit cards around half as popular as debit cards
Figure 27: Consumers who have used credit cards (chip & PIN, online and contactless) as a payment method in the last month, NI and RoI, April 2016
Credit cards usage highest when consumers transacting online
Figure 28: Consumers who have used a credit card (online) as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
Older consumers and ABC1s most likely to use pay with credit cards via chip & PIN
Figure 29: Consumers who have used a credit card (chip & PIN) as a payment method in the last month, by gender, age, and social class, NI and RoI, April 2016
Cheque usage weighted towards older consumers and ABC1s
Figure 30: Consumers who have used cheques as a payment method in the last month, by gender, age and social class, NI and RoI, April 2016
Direct debits, standing orders and transfers the modern cheques
Figure 31: Consumers who have used direct debits/standing orders as a payment method in the last month, by gender and age, NI and RoI, April 2016
Figure 32: Consumers who have used a bank transfer as a payment method in the last month, by age and social class, NI and RoI, April 2016
PayPal the clear leader among alternative payment methods
Figure 33: Consumers who have used PayPal, Android payment app, Apple Pay and Bitcoin as a payment method in the last month, NI and RoI, April 2016
PayPal usage reasonably high among all consumers
Figure 34: Consumers who have used PayPal as a payment method in the last month, by age and social class, NI and RoI, April 2016

The Consumer – Attitudes towards Cash and Cheques

Most believe cash and cheques are on the way out
Figure 35: Attitudes towards cash and cheques, NI and RoI, April 2016
Broad agreement that usefulness of cheques is waning
Figure 36: Agreement with statement, 'I think cheques are becoming obsolete', by gender, age and social class, NI and RoI, April 2016
Older consumers more resistant to idea of a cashless society
Figure 37: Disagreement with statement, ‘I feel a 'cashless society' is inevitable in the future’, by gender and age, NI and RoI, April 2016
ABC1s more inclined than C2DEFs to agree that cashless society is imminent
Around half recognise value of cash for budgeting purposes
Figure 38: Agreement with statement, ‘Using cash is the easiest way to keep track of spending’, by gender and age, NI and RoI, April 2016
Half agree, one in five disagree that cash is a more secure method of paying
Figure 39: Agreement with statement, ‘Cash is a more secure method of payment’, by gender, age and social class, NI and RoI, April 2016
Preference for cashless methods highest among younger consumers
Figure 40: Agreement with statement, ‘I prefer to use cashless payment methods when possible (eg contactless card)’, by age and social class, NI and RoI, April 2016

The Consumer – Attitudes towards Contactless Technology

Around four in 10 consumers using contactless more than they did last year
Figure 41: Agreement with statements relating to contactless payments, NI and RoI, April 2016
Growth in contactless use coming from ABC1s and 25-34s
Figure 42: Agreement with statement, ‘I am using contactless payments more compared to 12 months ago’, by gender, social class and age, NI and RoI, April 2016
Handing control to consumers would appeal to around 40%
Figure 43: Agreement with statement, ‘I would like to be able to set daily limits on how much I can spend with contactless payments (eg £100/€100 limit per day)’, by gender, social class and age. NI and RoI, April 2016

The Consumer – Attitudes towards Security

Majority of consumers want and value consumer protection
Figure 44: Attitudes towards selected statements relating to security, NI and RoI, April 2016
Demand for protection broadly consistent across all ages
Figure 45: Agreement with statement, ‘I am less likely to use a payment method that doesn't have some type of consumer guarantee or protection’, by gender and age, NI and RoI, April 2016
Six in 10 believe biometric measures would improve online security
Figure 46: Agreement with the statement, 'I think that biometric measures (eg fingerprints, iris scan) would help to improve online payment security', NI and RoI, April 2016

The Consumer – Attitudes towards New Technology

Consumer dubiousness when it comes to payments and social media
Figure 47: Agreement with statements relating to new payment-related technology, NI and RoI, April 2016
Tech-savvy consumers open to alternative means of verifying identity
Figure 48: Agreement with statement, ‘I would be interested in alternative means of verifying my identity when buying stuff online (eg taking a selfie instead of a password)’, by daily internet usage and devices in household, NI and RoI, April 2016
Majority would be uncomfortable sending payments via social media
Figure 49: Agreement with statement, ‘I would be comfortable using a social media or messaging app (such as Facebook Messenger or Whatsapp) to send payments to friends or family’, by daily internet usage, NI and RoI, April 2016

Appendix – Data Sources, Abbreviations and Supporting Information

Data sources
Abbreviations

Appendix – The Consumer

NI Toluna tables
Figure 50: Types of payment methods used by consumers (offline and online) in the last month, by demographics, NI, April 2016
Figure 51: Types of payment methods used by consumers (offline and online) in the last month, by demographics, NI, April 2016 (continued)
Figure 52: Types of payment methods used by consumers (offline and online) in the last month, by demographics, NI, April 2016 (continued)
Figure 53: Agreement with the statement ‘Using cash is the easiest way to keep track of spending’, by demographics, NI, April 2016
Figure 54: Agreement with the statement ‘Cash is a more secure method of payment’, by demographics, NI, April 2016
Figure 55: Agreement with the statement ‘I feel a 'cashless society' is inevitable in the future’, by demographics, NI, April 2016
Figure 56: Agreement with the statement ‘I think low domination coins should be taken out of circulation (eg 5p)/5c)’, by demographics, NI, April 2016
Figure 57: Agreement with the statement ‘I prefer to use cashless payment methods when possible (eg contactless card)’, by demographics, NI, April 2016
Figure 58: Agreement with the statement ‘I think biometric measures (eg fingerprints/iris scan) would help to improve online payment security’, by demographics, NI, April 2016
Figure 59: Agreement with the statement ‘I would be interested in alternative means of verifying my identity when buying stuff online (eg taking a selfie instead of a password)’, by demographics, NI, April 2016
Figure 60: Agreement with the statement ‘I am using contactless payments more compared to 12 months ago’, by demographics, NI, April 2016
Figure 61: Agreement with the statement ‘I am less likely to use a payment method that doesn’t have some type of consumer guarantee or protection’, by demographics, NI, April 2016
Figure 62: Agreement with the statement ‘I would like to be able to set daily limit on how much I can spend with contactless payments (eg £100/ €100) limit per day)’, by demographics, NI, April 2016
Figure 63: Agreement with the statement ‘I think cheques are becoming obsolete’, by demographics, NI, April 2016
Figure 64: Agreement with the statement ‘I would be comfortable using a social media or messaging app (eg Facebook Messenger, Whatsapp) to send payments to friends and family’, by demographics, NI, April 2016
RoI Toluna tables
Figure 65: Types of payment methods used by consumers (offline and online) in the last month, by demographics, RoI, April 2016
Figure 66: Types of payment methods used by consumers (offline and online) in the last month, by demographics, RoI, April 2016 (continued)
Figure 67: Types of payment methods used by consumers (offline and online) in the last month, by demographics, RoI, April 2016 (continued)
Figure 68: Agreement with the statement ‘Using cash is the easiest way to keep track of spending’, by demographics, RoI, April 2016
Figure 69: Agreement with the statement ‘Cash is a more secure method of payment’, by demographics, RoI, April 2016
Figure 70: Agreement with the statement ‘I feel a 'cashless society' is inevitable in the future’, by demographics, RoI, April 2016
Figure 71: Agreement with the statement ‘I think low domination coins should be taken out of circulation (eg 5p/5c)’, by demographics, RoI, April 2016
Figure 72: Agreement with the statement ‘I prefer to use cashless payment methods when possible (eg contactless card)’, by demographics, RoI, April 2016
Figure 73: Agreement with the statement ‘I think biometric measures (eg fingerprints/iris scan) would help to improve online payment security’, by demographics, RoI, April 2016
Figure 74: Agreement with the statement ‘I would be interested in alternative means of verifying my identity when buying stuff online (eg taking a selfie instead of a password)’, by demographics, RoI, April 2016
Figure 75: Agreement with the statement ‘I am using contactless payments more compared to 12 months ago’, by demographics, RoI, April 2016
Figure 76: Agreement with the statement ‘I am less likely to use a payment method that doesn’t have some type of consumer guarantee or protection’, by demographics, RoI, April 2016
Figure 77: Agreement with the statement ‘I would like to be able to set daily limit on how much I can spend with contactless payments (eg £100/€100) limit per day)’, by demographics, RoI, April 2016
Figure 78: Agreement with the statement ‘I think cheques are becoming obsolete’, by demographics, RoI, April 2016
Figure 79: Agreement with the statement ‘I would be comfortable using a social media or messaging app (eg Facebook Messenger, Whatsapp) to send payments to friends and family’, by demographics, RoI, April 2016

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