The Coronavirus pandemic has promoted a huge surge in cashless payments, with Link, the company that manages the UK’s network of public cashpoints, reporting cash withdrawals have dropped by more than 60 percent during lockdown. This change of consumer behaviour has been spurred by the closure of shops, a rise in online shopping, and government guidance that cash may be a vehicle for transmission of the virus.
Many businesses have even been refusing to accept cash payments during the crisis. The global coffee chain, Costa, are among those businesses who have embraced a card-only settlement plan to reduce the risk on contamination.
And it’s not just the big chains putting in these plans. Many small-to-medium-sized businesses have also been quick to adapt with the times. This process has involved putting in place options for customers to pay online and ensuring card readers are optimised for contactless payments.
A surge in contactless payments
Paying via contactless has become the payment option of choice for those cautious customers wanting to avoid touching the reader altogether for fear of contamination. In response to this, on March 23rd the contactless payments limit was risen from £30 to £45 in order to facilitate the growing consumer demands.
With trends like this, it’s not difficult to envisage a future that is completely cashless. The chase for the cashless economy tag has been at the forefront of UK government initiatives for quite some time now, wanting to follow in the footsteps of countries like Sweden who have already made the switch.
But with businesses now actively refusing cash, the timescale of this drive towards cashless has just accelerated.
Why the drive to cashless?
With all it’s benefits, it’s not hard to see why a cashless society has its attractions. Such benefits include a reduction in the risk of theft and tax avoidance, and making it harder for criminals who rely on cash payments.
For businesses, contactless payment options can significantly reduce friction and waiting times at stores. This, in turn, improves efficiency and the likelihood your happy customers will stay loyal. Many businesses who have prepared for this trend and are already reaping the benefits have invested in payment solutions fitted with the latest technology and security such as those provided by UTP Group. While cash is not quite dead, businesses must ensure they are providing the widest range of payment options in order to cater to all customers. Those who don’t, will likely struggle.
Contactless and digital payments can also be hugely beneficial for your businesses personalised marketing efforts. For example, you can build loyalty programs using data collected through payments, boosting customer retention with personalised reward-based offers.
For the consumer, as well as being a lot more hygienic, the use of digital payment methods is both more convenient and secure than cash. These days, if you lose your card you can freeze it in a matter of seconds via an app. With advancement in technology, security is expected to be taken even further through developments such as biometrics and facial recognition payments which as already been well-established in China.
The barriers to a cashless society?
So with all the benefits, why the wait? Despite the innovation in digital payments and the acceleration of cashless businesses due to Coronavirus, concerns still remain around individuals who will be alienated by a cashless society.
This includes the unbanked population (those without bank accounts or bank cards), and individuals who are not technologically literate.
It is estimated that around 1.5 million adults in the UK are unbanked. Included in this popular are those who have difficulty getting their hands on a bank card due to poor credit history, many older people who are used to managing their affairs in cash, and critics who believe the government will have greater access to information about their private finances.
Adoption is the bump in the road on the journey towards cashless
And so, perhaps the biggest barrier to a cashless future are the people and those unwilling to adopt it. In response to concerns from the unbanked during this time, the Government said in its March budget that it would legislate to protect access to cash for as long as people needed it. Campaigners have asked for this legislation to be accelerated following the COVID-19 crisis and lockdown to avoid excluding those who rely on cash and physical banking.
So, while the UK have been on the road to a cashless society long before the current crisis hit, there’s no denying that COVID-19 has played a major role in the acceleration of these plans. What is clear is that the smooth transition can only be enabled with the use of high quality and reliable digital payment solutions, which will allow businesses to evolve with the rapidly changing market.