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 27th 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