How much of what is in your wallet do you actively use? Will we carry a physical wallet at all in five years’ time or will we become fully reliant on smartphone payments? Around 21 per cent of Brits expect to completely ditch their physical wallet within five years, according to new research.
Research from Mastercard in partnership with fashion communication graduates of arts and design college Central Saint Martins looked into the changing use of physical wallets. Market research company Opinium conducted the research on 2,000 UK adults.
While over one in five Brits do not expect to hold a physical wallet in five years, this number rises to 34 per cent among Gen Z; with a further rise to 38 per cent of Millennials.
The initial results appear to indicate that younger people are taking to digital payments and cards more quickly than those older than them. The Mastercard research also found that people are increasingly considering physical wallets increasingly seen as a personal archive; instead of their intended use to house cash and cards.
One BA Fashion Communication graduate said: “Nowadays, wallets are so much more than just a money receptacle. They hold memories, photos, lucky charms, hand-scribbled notes and once forgotten loyalty cards that are yet to be transported into the digital space.”
Ninety-three per cent of consumers said they are considering using alternative means of payment in the next year. New forms included contactless, QR codes, biometric payments, and cryptocurrency transactions.
Wallets join the payments journey – from physical to digital
The Bank of England has estimated that 60 per cent of all payments were made in cash in the UK one decade ago. In 2020, cash accounted for only 17 per cent of all payments made. While the pandemic accelerated a drop in the use of cash, as many opted for contactless in response to the outbreak, cash has not recovered. Instead, a UK Finance estimate places cash payments accounting for just six per cent by 2032.
Interestingly, the reduction in cash payments has not only impacted the number of physical wallets being carried by people. The size of wallets and purses in the UK may have also taken a hit. Around 30 per cent of those surveyed said that the wallet or purse they hold now, is smaller than the one they had five years ago. Thirty-three per cent also said that they would no longer look for a coin compartment when buying a new one.
These results are a testament to the idea that the use (and usefulness) of wallets continues to change. Almost half (40 per cent) of people said they would now opt for the smallest wallet or purse possible.
Kelly Devine, president of UK and Ireland at Mastercard, explained the research results.
Devine commented: “We don’t often consider the impact that changing payment preferences have on the accessories we choose to buy and use. In contrast to a decade ago, many who still carry wallets are now seeing them more as a site of personal archive rather than a vessel for physical cash and cards.
“As technology continues to evolve, wallets shrink, and people increasingly embrace digital methods of payment, our focus remains on delivering choice, convenience, and speed for people around the country.”
Mastercard found that half of people (49 per cent) only carry a wallet or purse because it’s helpful to have their other cards. Many people only keep wallets and purses to hold loyalty cards and driver’s licenses.
As cash usage drastically declines in areas worldwide and as people become more open to using new means of payment, it looks as though the future may quickly write physical wallets out completely.
Overall, it appears the future may only have space for digital alternatives to payments, as the likes of loyalty cards, licences and more follow cash to become digital.