The speed of adoption of new payment technology has shifted from an evolution to a full revolution in the last 12 months.

It doesn’t seem that long ago that the big discussion was the slow demise of cash, as chip & PIN and then contactless cards became the new dominant means of paying for goods.

But already we’re seeing the early signs that contactless debit and credit cards are under threat, with the emergence of new payment technology in the form of digital wallets.

Can it really be the case that less than a year after the use of contactless cards exploded as a reaction to the Covid-19 pandemic, that we’re already watching a new payment player take over?

Let’s take a look.

The rise of digital wallets

A digital wallet is an electronic device which allows users to store all their payment information in a single secure place – usually their smartphone.

Along with details of payment methods like Apple Pay on iPhones and Google Pay on Android devices, digital wallets let users sync their bank details, so they can pay for goods without needing a bank card.

And their use is skyrocketing.

By 2025 it’s predicted that worldwide spend through digital wallets will exceed £10trillion, nearly double their current £5.5trillion contribution to the economy.

That’s according to a study by Juniper Research.

Other research shows how digital wallets have already become the favourite means of paying in some circumstances.

One report revealed that digital wallets have overtaken debit cards as the most popular means of paying for goods online.

According to the report, digital wallets made up 32% of all online payments in 2020, compared to 29% for debit cards.

By 2024, at the current rate, digital wallets will make up 40% of all online payments.

Consumer confidence driving rise in payment technology

One of the biggest reasons for the accelerated rise in popularity of digital wallets has been their use during the Covid-19 pandemic in 2020 and the first half of this year.

Overnight, consumers who had never considered using an alternative to their current payment method, be it cash or contactless, were forced to adapt to new rules and guidance from governments and health authorities.

As people were urged to ‘go contactless’ to help avoid the spread of Covid, they got used to using new payment technology, and it’s now become second nature for many to reach for the smartphone and digital wallet.

Last year, one in 10 consumers said they had used a digital wallet to make a payment for the first time.

When consumers started using digital wallets in store, two things happened.

They realised how convenient it was to pay for goods using a device they often carried around anyway.

And they lost many of the fears they held previously around the security and privacy of digital payments.

Today consumers are more confident about using digital payments and many of the concerns they had before simply don’t exist.

The thought of tapping their phone against a card machine is as normal as handing over a £20 note used to be.

To highlight the point further, a 2021 study by Experian found that 60% of consumers are now using a digital wallet to pay for items at least some of the time.

What does this mean for contactless cards?

Well, according to one study, mobile wallets have overtaken debit cards as the most popular payment method three years earlier than predicted. At the current rate, debit cards could go the way of cash in the next 5 to 10 years.

What does this mean for merchants?

While fast paced changes to payment technology are exciting, they do present a real and present challenge to businesses.

Namely, how do they adapt their payment strategies to incorporate digital wallets, and even start offering online payments and services.

Luckily, when it comes to accepting digital wallet payments in store, they already have the technology they need to accept payments, provided they have a contactless card machine.

Essentially, payment systems like Apple Pay work using the same signals used by contactless cards.

These signals pass between a consumer’s smartphone and the contactless card machine to start the payment, and it is processed exactly the same way as a contactless card would be.

And it really is now becoming essential that businesses, no matter what size they are, start to look seriously at whether they’re accepting the kind of payments their customers expect to use.

It used to be that having a contactless card machine put you ahead of the competition on your customer service and ease of payment.

Today, it’s become the price of entry and customers expect to be able to pay using a vast array of devices, accounts and cards.

Adapting to a changing payment landscape

Not surprisingly, it is the younger generations who are driving the revolution in payment technology.

More than 40% of 18-26 year olds in the UK have registered their details with a mobile payment system.

And 38% of 27-37 year olds have followed.

But with more than one in 10 38-52 year olds also registered for digital wallets, it’s not just a young person’s preference.

Having said that, looking to the future of payments, it is clear that younger shoppers are more confident with digital payments, and they’re also more demanding that shops and other businesses meet those expectations.

Shifting payment strategies towards contactless and digital wallets isn’t just about keeping up with a current trend, it’s about safeguarding for the future.

Most people are looking for ways to make their money grow and secure their families financial futures, but it isn’t simply about the acquisition of money; it is about making it go further. After all, life is full of surprises, and there are many unexpected expenses that you could encounter, from accidents to repairs to just general misfortune. 

The key is to try and prepare for these events so that your finances don’t take as much of a hit from them, but how?  Below you will find a few different ways to help protect your family’s finances.

Lifestyle

Luxuries make life worth living for some people; however, most of us do have some sort of dependence on those little added extras such as takeaways and streaming services. However, most people often forget that becoming accustomed to a particular lifestyle can make it much harder to adjust if something were to happen. It may not feel like you’re living beyond your means, but if something affected your finances, would you be able to continue with the lifestyle that you enjoy? If the answer is no, then that could mean that your finances are overextended.

If you were to introduce small changes now, they wouldn’t be too noticeable, but they would lessen your financial burden and help to protect your future. These changes can be simple and gradual, trim the fat and cut out or cut back on unnecessary expenses. That isn’t to say you can’t enjoy your hard-earned money but be smart with it. For example, instead of having a takeaway once a week, why not cut back to once a month. Or think about how much use you get out of the things you have subscriptions to and maybe consider getting rid of the ones you don’t use often. Streamlining your expenses and considering your lifestyle is an easy way to begin the process of planning for your family’s financial future.

Emergency Fund

Budgeting is a popular aim for a reason; it keeps people on track and helps them control their spending habits. However, budgeting can be challenging to maintain because there are so many variables. First, there are the regular fixed expenditures such as housing, bills, and insurance, but after that, expenses can fluctuate, for example, the food shopping or petrol money of entertainment. It is easy for one unexpectedly big expense to throw off your whole budget for the month, which is why you need an emergency fund.

The amount that you should have stashed away varies depending on who you ask; some people recommend six months salary, but that figure is disputed and, for some people, a little bit unrealistic. It may be worth sitting down and working out your expenses and then use those to come up with a flat figure. How can you create an emergency fund when you have no extra income? Start small, save a couple of hundred pounds a month or whatever you can afford. If you save diligently and consistently, you will find that your fund soon grows. If you get a bonus or unexpected monetary influx, add it straight to your savings as you won’t miss it. Cutting unnecessary expenses and streamlining, as mentioned above, can be an easy way to add more to the fund.

Debts

Nothing depletes savings like a mountain of debt. So if you want to protect your family’s finances, now is the time to pay it off. Although, of course, that is easier said than done. There are some tips you can use to help you tackle your debt; you should start by paying down the debts with the highest interest rates first. Some people prefer to get rid of their smaller debts first which can help in that it gives them the motivation to keep going, but the debts with higher interest rates can really snowball, and so they should ideally be tackled first. As you begin to make your way through your debts, you may find that you have extra cash which you can use to pay down your debts more quickly or contribute more to your emergency fund.

Insurance

Insurance can seem like just another expense, but you do need it – car insurance, home insurance, life insurance and income insurance. Not buying insurance remains one of the biggest financial mistakes that people make, or if they do buy it, they tend to go for the cheapest option without really considering what it covers. Do some research and look into what you are actually buying. Do you understand the terms used in insurance paperwork? Some insurance companies include things in the fine print that you need to understand.

Insurance helps you plan for the worst-case scenarios, although most people only have a few different policies. A lesser-known policy is that of income insurance. But what is income protection? Income insurance allows you to claim a regular income if you can’t work because of sickness or disability. These payments continue until you can return to paid work or you hit retirement age. This type of insurance is advisable for any member of your household that contributes a regular income. If this is something you would like to consider, look up Drewberry Insurance as their policies come highly recommended by their previous clients.

Invest in Yourself

One great way to help you reach long-term financial security is to invest in yourself. Expand your skills and improve your education. The more capabilities you have, the more valuable you are as an employee. Trying to grow as a professional ensures that you won’t be left behind; it puts you in a competitive position for many job roles besides the one you currently hold. You may also find that you get more opportunities to venture out on your own to explore other possibilities for wealth. You should make sure that you can determine your value in the workforce and don’t have to rely on someone else for it.

Leaving a Legacy

Some people think that leaving a legacy refers to inheritance or the passing down of a family business, but this isn’t always the case. It is important for your family’s financial future that you are teaching your children the best financial practices. Help them to see what they should prioritise and that it shouldn’t necessarily be having the latest games console or smartphone. Get them involved in budgeting and the bills. Giving your children the tools they need to make sound financial decisions is an excellent way to further the financial stability of your family for generations to come.

That isn’t to say that leaving a financial legacy is not also important. You should also be considering your family’s future if the worst were to happen. Look at all the scenarios and plan for each of them. It is all about limiting the financial blow it will cause your family and making sure they will be okay in your absence.

In Conclusion

There are several things you can do to protect the financial future of your family. It will require a lot of planning which may be stressful to begin with, but these things will soon become habits, and you won’t think twice about them. The peace of mind you can get from knowing that your family’s future is protected can be a great comfort.

Retirement is meant to be a time when you can enjoy all that you’ve worked for your whole adult life. Whether you’re looking forward to cruises around the world or looking after grandchildren, maybe playing golf with friends or finally getting a dog, retirement doesn’t come cheap! 

Equity release experts, Key, asked near-retiring Brits if they feel financially prepared for retirement and only 69% felt quite prepared, although nearly half of these (49%) are still cautious about their situation.

Average retirement pot

As the average State Pension age continues to increase, Key’s ‘Retirement Ready’ study found that despite the pandemic, the expected income of those planning on retiring has in fact grown by £1,000 in 12 months. With the average pension pot  for 2021 coming in at £21,663. 

But not all retirees can expect the same income in retirement. Those who own homes retire on over two fifths more than those who don’t own property, with homeowners pension pots worth around £23,392 compared with £16,356 for non-homeowners.

Attitudes surrounding retirement funds

2020 and the early part of 2021 may have been some of the most financially unstable times we’ve experienced in recent times, and it appears these fears have left many approaching retirement with concerns surrounding their finances.

One in six of those planning to retire this year feel financially unprepared. For those who don’t own a home this figure more than doubles at 38%. The research suggests that where you come from can also impact how much you feel financially prepared.

Those living in London feel the most optimistic, with just under three quarters (74%) feeling financially prepared, whereas those in the North East feel the least optimistic, with just over a quarter feeling financially unprepared for their retirement.

How to earn extra money when retired

Regardless of whether you feel financially prepared or not, there are a few ways you can earn some extra money when you’ve retired that won’t get in the way of your newfound freedom.

Rent out a room: Research suggests that two thirds of older homeowners have two spare rooms, so why not make the most out of the extra space and  take in a lodger. If you live in a city or town centre and parking is at a premium, you could also consider renting out your car parking space or driveway for some extra cash.

Sell unwanted items: Many people when they retire consider downsizing. With downsizing comes the realisation that you have a lot of stuff that won’t fit into your new home. This presents the perfect opportunity to sell any unwanted items – and make a tidy profit that you can put towards your retirement fund.

Become a dog walker: With so many households getting pets during lockdown, many families are left wondering what to do with their canine companions now they’re going back to work. Setting yourself up as a dog walker is not only a great way to earn some extra income, but it will keep you fit too.

Tutoring: You will have gained a lot of experience and knowledge over your career, all of which can be put to good use in the form of tutoring. Whether you teach younger or more mature students, tutoring can help you to fill your time, give you a sense of satisfaction and earn a little extra money for your retirement goals.

Photography: If you’re a keen photographer, or even just do it for the fun of it – there are ways to sell your work online and at events. It could be photos of wildlife, landscapes or architecture – even if you don’t manage to sell them, the process is still enjoyable.