Cash payments in the UK have declined from 58% to 23% since 2009. At the same time, the use of card payments, and contactless payments has rocketed. In September 2020, there were 1.1 billion debit and credit card transactions in the UK, worth £48.9billion. Of those, contactless accounted for 64% of all debit card transactions and 46% of credit card payments.
So, with cash on a continuing downslide and digital payments and eWallets already emerging as the major contenders to contactless cards, is it time to prepare for the UK to become a cashless society?
What does “cashless society” even mean?
The rise of digital payment methods like cards, e-wallets, and apps is now reducing the need for physical cash transactions. Though the use of cash is steadily declining, it’s unlikely that government treasuries will stop minting coins and printing notes altogether.
The Bank of England is continuing to redesign and print banknotes for the foreseeable future. Calls are also being made to help protect cash, to make sure people who still use it aren’t left behind.
In March 2020, Chancellor Rushi Sunak announced official measures which will ensure banks continue to provide cash to customers who rely on it.
Is the UK going cashless?
Recent statistics reveal that cash is still the second most frequent payment method in the UK, with 23% of all payments being in cash. While 59% of adult Brits believe that Britain will be cashless by 2030, experts have predicted that it’ll take another 15 years for cash transactions to drop to 10%.
Rather than being completely cashless, our society will just use less cash. Even if we don’t become 100% reliant on them in the next decade or two, businesses can’t deny the domination of digital payments. Card payments account for 51% of all payments in the UK, and 21% of card payments are contactless. These numbers are likely to keep rising in the coming years.
Any organisation taking payments needs to get with the times and offer cashless payment options – even if they still accept cash payments too.
How has COVID-19 impacted cash payments?
The effects of the pandemic has only sped up the use of contactless card payments. A study by Goldman Sachs revealed that 51% of UK adults are less likely to use cash because of COVID-19.
Fear of potentially transmitting the virus by handling physical cash has led to governments and retailers around the world promoting cashless payments to reduce contact. People are taking safety seriously and relying more on the convenience of card payments, particularly contactless payments which don’t involve having to touch a keypad to enter a PIN.
Following the contactless limit increase from £30 to £45 per transaction in April 2020, Visa reported processing 500 million more contactless payments than expected by mid-October. To keep up with consumers, businesses have also been investing in providing more card payment options for their customers.
Since the first lockdown began last March, the number of small businesses in Britain signing up for card payment services has jumped from 37% to 65%. More than a third of small businesses now believe that accepting contactless payments will help them operate better.
If the UK contactless payment limit is raised to £100 like financial industry leaders are suggesting, card payments are likely to grow even more.
Though the pandemic is causing some people to panic about cash, RBR London director Morgan Jorgensen told the New York Times that it’s only accelerating the decline that was already happening, and that cash isn’t going to disappear completely.
What are the benefits of businesses going cashless?
If the stats discussed so far aren’t enough to sway you, consider the benefits of switching to cashless payments below.
- Efficiency: Tap-and-go cashless payments or pre-payments through apps make purchases much faster and more convenient.
- Security: Less cash means fewer trips to the bank and a lower risk of physical theft, and encrypted payments with digital records reduce fraud.
- Accuracy: Automatic recording of digital payments reduces accounting mistakes and offers real-time customer data collection.
- Safety: Allowing contactless payments to reduce physical contact is extremely important for both customers and employees.
Cashless payment methods are altogether more streamlined and secure, and they’re clearly the preferred method for the majority of the British public. At this point, investing in cashless payment services is a necessity for any business that wants to survive.
Should your business go cashless?
Only 27% of small businesses in Britain are currently cashless, though this number will keep growing over time. If you’re interested in advancing your business towards a cashless model, you’ll need to create a long-term business plan.
- Consider your customers – What are their most common spending habits? How are they likely to react to your business going cashless?
- Explore your options – Look into the types of cashless payment equipment and services that suit your business needs. If you haven’t invested in contactless card readers yet, isn’t it time?
- Promote your cashless methods – Do you have a plan for how to let customers know which payment methods you accept and reassure them about payment security?
- Offer a range of payment types – There are lots of different ways to pay digitally. Do you provide a choice of card machines for card payments and mobile payments? Are you excluding cash completely?
This last point is one of the most important. Rejecting cash payments isn’t against the law, but you don’t want to lose customers who do use cash just because they’re the minority. Inclusive businesses will have their eye on the future with cashless payments while avoiding the neglect of older and more vulnerable people who still use cash.