Driving forces of the digital revolution
Table of Contents
In the last five years, the payment habits of Latvian residents have undergone a significant transformation, and more and more people are discovering the convenience and advantages of e-commerce. This digital revolution did not happen by accident – it is fueled by several important factors that together form a powerful driving force. One of the main reasons is the continuous development of e-commerce, which offers an ever-widening range of goods and services right at your fingertips. At the same time, entrepreneurs are increasingly actively seeking to offer customers more convenient and faster payment solutions, realizing that these aspects often decide the buyer’s choice. We cannot forget about the increase in the digital skills of society – people are becoming more and more confident and competent when using digital technologies in their daily transactions. Together, these factors contribute to online payments becoming an integral part of everyday life, covering everything from food purchases and utility payments to services such as food delivery and transport bookings. This trend is also particularly pronounced in other European countries, where online payments are growing directly for food and everyday goods.
The data show an impressive increase in the share of online payments in Latvia. While cash is still the dominant form of payment in the European Union as a whole, Latvia has taken a bold step forward in the direction of digital transformation. Currently, an impressive 78% of payments in Latvia are made in cashless form. But the most impressive change can be seen in the field of online payments. If as recently as 2019, only 7% of the population made daily payments online, then by 2024 this indicator has reached even 25%. This means that every fourth payment is made digitally these days! This dynamic is not unique to Latvia; similar trends can also be observed in other Baltic countries. In Lithuania, the share of online payments has grown by 17%, and in Estonia – by 8%. It is interesting that in European countries, this increase was most evident in the purchase of food and everyday goods, as well as in the growing number of food delivery orders, which now make up 11% of all payments. Data from the European Central Bank (ECB) confirm this trend, indicating that the volume of online payments in Latvia has tripled over the past five years. This clearly confirms that the popularity of online payments continues to grow rapidly, replacing traditional cash payment methods with more convenient and modern solutions.
Citizens are spending more online
Not only the number of transactions has increased, but also the total value of online payments. Compared to 2019, Latvian residents spend 23% more online. This clearly confirms that citizens are not only ready to use digital payment solutions more often, but also to make larger purchases online. Although the average amount of online payment has remained constant over the last five years – around 50 euros, the total turnover has grown. Analyzing the turnover changes in various sectors since 2022, the biggest increase can be observed in cosmetics trade and in the building materials and home goods segment. One of the main reasons for the popularity of online payments is both the perfect convenience and strong security solutions that ensure a fast and transparent payment experience.
Mobile payments and the popularity of new payment methods
The use of Apple Pay is experiencing particularly rapid growth, which has doubled in less than a year alone. Google Pay is also gradually consolidating its position, albeit at a slower pace. Although Internet banking still remains the most popular form of payment, its share has declined slightly, giving way to new technologies. These changes clearly mark a fundamental change in behavior in the Baltic region, where customers have historically trusted bank payments. The convenience and speed of Apple Pay and Google Pay are especially important on mobile devices, as they reduce user friction and significantly improve conversion rates. No need to enter card details, payment can be completed with one touch or biometric authentication.
Businesses must be able to adapt to the digital landscape
To successfully compete in today’s dynamic market, it is essential for merchants to provide customers with convenient and diverse payment options, especially online. This not only improves customer satisfaction, but also directly contributes to increased sales. The demand for modern and innovative solutions is constantly growing, and companies that are able to adapt to these changes in time gain significant competitive advantages. These data clearly mark a long-term trend – digital payments are becoming a dominant form of payment not only in Latvia, but also in all the Baltic countries, and the demand for them continues to grow continuously. For companies that want to develop and maintain their positions in the market, it is important to follow these trends and integrate digital payment solutions into their business strategy.
