Evolución tecnológica Innovation

How long before physical credit cards disappear?

21/06/21 5 min. read

Some time ago we published an article in which we talked about the disappearance of cash, which you can read here. Now that the time has come, let’s talk about the disappearance of physical cards.

For context, let’s take a look at how the trend of cash versus card payments has evolved in recent years.

The year 2020 with the emergence of COVID-19 has been a year that will mark a before and after in our history in all aspects: personal, work, health, leisure… And in the aspect we are going to discuss, 2020 has been radical in accelerating the trends that had been commented on in the banking sector since 2017.

How the use of cash has declined

The pandemic has caused cash transactions to decrease considerably mainly for 2 reasons:

  • Confinement: made cash transactions impossible unless we paid in cash in supermarkets or basic necessities establishments, since everything was closed.
  • Fear of contagion: WHO recommendations to reduce the risk of COVID-19 transmission included the use of contactless means of payment and avoidance of cash payments.

This led to an increase in point-of-sale purchases to 4.7 million transactions. A 20% compared to 2018 ( and that during the months of confinement, due to business closures the % of transactions was much lower than usual in that quarter).

Increased point-of-sale purchases during confinement
Source: Bank of Spain

Cash withdrawal operations at ATMs decreased by almost 31% compared to 2019. We can clearly see that despite the fact that Spain is one of the countries in Europe where more cash transactions are carried out, credit card transactions have been taking over the “cash” terrain.

Decreases cash withdrawals at ATMs during confinement
Source: Bank of Spain

Once we have put ourselves in the context that credit card transactions are up and cash transactions are down we focus on what the present and future of card payments looks like and will look like.

Present and future of card payments

Currently in Spain, 87% of the population has a debit or credit card (there are currently some 86 million cards in circulation). Although these physical cards are being replaced by virtual cards downloaded to smartphones, as most of you will already have.

“Digital natives or “consumer 3.0″ do not want to carry anything in their pockets and want to be able to do as much business as they can from their cell phones”

It has replaced the wallet with countless cards that our parents used to carry, for Wallet type applications where they can store both debit cards, credit cards or loyalty cards of their usual stores.

Mobile payments are growing rapidly in stores and establishments. Being able to take out your smartphone, enter your pin or fingerprint and make your payment securely in just a few seconds is now an everyday occurrence in our society.

In studies of Samsung Pay in 2019, the number of mobile transactions increased by 200% over the previous year and the number of weekly active users increased by 131%.

For example, Paypal has gone from 5% of transactions from mobile in 2012 to more than a third of its transactions being made from smartphones.

Estimates that had been made since 2016 for successive years have been far exceeded in 2020 despite the pandemic, as in 2021:

According to Statista Digital Market, estimates for mobile payments in Spain ranged from €350.2 million in transactions with 1.7 million active users in 2017 to €1,883.5 million with 3.4 million users in 2021.

These data predicted a x6 increase in 4 years in value of transactions and a x2 increase in number of mobile users, which have been fulfilled even with the pandemic.

In Spain, we are moving towards the world of mobile payments but we are still far behind in comparison with other European countries. In countries like Sweden more than 80% of purchases are made with mobile payment in transactions as peculiar as church collections.

Some consultants indicate that the demise of physical cards has an approaching date and with the speed at which the world is changing we are sure that date is just around the corner.

In no time, having a physical card as a souvenir will be like the person who kept the pesetas to place them on the Statue of Liberty ☺️

Santander Global Tech is the global technology company, part of Santander’s Technology and Operations (T&O) division. With more than 2,000 employees and based in Madrid, we work to make Santander an open platform for financial services.

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Beatriz Rodríguez

Santander Global Tech

Telecommunications engineer with a long career path in banking technology. Love a good team-work, collaborate and create solutions that make life easier to the users. I spent my free time mostly with my family.


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