Where are payments going? Look to Poland (plus Chris Skinner’s 2 cents)

Phones replace wallets

Can you imagine an easier, quicker and more secure way to pay than mobile contactless payments? To those three attributes, we may add a fourth that has been recently trending, and is also the most hygienic practice of payment. But let's not give up, and try to find a better alternative. Would it be cash? When I think about it, I imagine complex processing and handling of banknotes and coins, low turnover and queues likely to build up, together with the frustration of waiting customers. So that’s a ‘No’ to cash.?

If not cash, then we may think of something more convenient… and I will not even mention bank cheques! Perhaps payment cards? Truth to be told, it's easy to swipe your card in a reader if you do it often. But entering your PIN each time? Remembering different PINs for different cards in your wallet? I really hope you don’t use the same 4 digits for all your cards, or do you? One PIN to rule them all might be tempting, but certainly not the safest solution.?

In fact the humble card may already be on the verge of obsolescence thanks to mobile contactless payments. More and more of us choose our mobile phone over our wallet if we have to leave the house in a hurry, and this trend suggests smartphones are on track to replace wallets very soon. With digital identification services booming around the world, and ticketing systems in apps and mobile payments on the rise, many of us have already said goodbye to wallets.

People are getting ready to abandon cash. Those who hesitate are now pushed to stop using cash as a social distancing practice in these times of global pandemic. But are the acquirers ready to accept contactless payments? Can you pay with your phone in the nearby grocery store? Are the issuers prepared to deliver mobile payments to demanding users? Can you tokenize your card in one of the digital wallets? The country that ticks all the boxes for a contactless future is Poland.?

Taps replace swipes

Poland is one of the worldwide leaders in contactless payments. Poles carry around 44.3 million payment cards, and 88.5% of these are contactless. Looking at the historical growth, we can expect that in a few years from now all of them will be contactless, with my best educated guess being 2025. Today, the majority of local banks allow customers to tokenize their cards in third party mobile wallets such as Google and Apple Pay.?

Worth noting is that Google Pay was launched in Poland on November 17, 2016 (having started as Android Pay). Poland was the 6th country in the world to get it, and the 2nd in Europe. Apple Pay arrived a bit later on June 19, 2018. Poland was not on the priority list in Cupertino, but knowing that iPhone ownership was estimated as just roughly 10% of the Polish market, it shows that the country is seen as a worldwide leader in contactless payments.

You can pay with contactless technology virtually at every store in Poland. By the end of 2018 almost all of the 786,845 payment terminals were accepting contactless payments. To be precise, 84 terminals were non-contactless, but 3 months later, we closed the first quarter of 2019 with 100% share of contactless terminals. As of the second quarter of 2021, you can find?1.1 million terminals in Poland, and of course all accept tap & go payments.?

Contactless cards are seen by many as an intermediary step towards contactless mobile payments such as those already mentioned from Google and Apple, but also by Garmin and Fitbit Pay. According to various sources, Poles have tokenized around 7 million cards, roughly translating to 16% of all cards. Rising popularity of contactless mobile payments might be indirectly influenced by adoption of mobile banking apps, with 14.5 million active users as of the first quarter of 2021.?

Continuous growth in contactless payments will be accelerated by a newly delivered contactless solution from Polish mobile payments provider BLIK. It allows users to make contactless payments directly from their bank account via their mobile banking app, without needing a debit or credit card. With a strong user base of 8.6 million active users, and 193.8 million transactions per quarter (Q3 2021) it is not an overstatement that the next couple of months will see a spike in contactless payments in already contactless Poland.

Chris Skinner’s 2 cents

For a long time I’ve admired Poland’s innovations in finance from afar, but when I moved here in 2018 my eyes were opened even wider. Opening a bank account was easy and, even though they gave me a ton of paper documents and a debit card, I don’t use either. The account opening documents are in a drawer somewhere, and everything else is by contactless payments using the Apple Wallet and BLIK. Everything related to what I need to do with the bank is in-app, and I haven’t used any paper cash since. Easily a country that is on the edge of the future.

Is your country ready for a contactless future?

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All charts based on data published by the National Bank of Poland. If you have any questions, then feel free to comment or reach out to me directly. Also, please note that this article is my personal opinion and does not necessarily represent the view of my employer.?

Thank you for reading.