Spain’s tourism sector makes up approximately 12% of its GDP and 13% of its employment*, and a steep decline in this market will heavily impact the country’s payments sector, says GlobalData, a leading data and analytics company.

Ravi Sharma, Banking and Payments Analyst at GlobalData, comments: “According to GlobalData’s 2019 Banking and Payments Survey, travel and accommodation and food and drink accounted for almost 43% of the debit card transaction value.  Payment companies will lose out on this significant chunk of business if the COVID-19 outbreak is not contained at the earliest possible opportunity.”

Spain is also traditionally a cash-dominated market, as it accounts for over 60% of total transaction volume. This will almost certainly change, as banks and merchants are urging customers to use non-cash payment methods to help contain the spread of the virus. The national railway operator, Renfe Operadora, stopped accepting cash payments from 27^th March 2020.

GlobalData forecasts total transaction value in Spain to rise at a compound annual growth rate (CAGR) of 2.2% between 2019 and 2023, which was revised down from a CAGR of 5.4% before the pandemic. Forecasts for total cash transaction value has gone from 1.2% CAGR to a negative growth of -2% CAGR up to 2023, as consumers move to digital payments.

Sharma continued: “Consumers are likely to switch from low-value cash payments to digital payment tools such as contactless cards or mobile wallets. The increased contactless payment limit will further drive usage. This is likely to have a long-term impact on its payment industry, as consumers begun to learn new behaviors they have been reluctant to adopt previously.”

* As of the end of 2019