Almost two years ago, I wrote about the UK’s march towards being a cashless society, suggesting that “cash could be used in as few as one in ten transactions [by 2033]”. Looking at current trends, it appears that this prediction will be a correct one. More than half of us are using cash less, and withdrawals from cash machines have dropped by more than 60 per cent over the last year.
How did I know this would happen? Whilst the pandemic is the clear and obvious factor and the biggest disruption to day-to-day life outside of wartime. There’s also a number of other reasons as to why this has taken place. We take a look at what’s changed in the world of payments.
Pre-COVID changes
Payments were changing long before the pandemic. From 2017 to 2019, the number of individuals who reported using cash on a basis of just a month or less increased more than two-fold in 7.4 million. Similarly, many businesses – especially in larger cities – had already elected to go cashless. There are a number of reasons for this. From the perspective of the consumer, electronic money (e-money) is much easier to store – carrying £1000 in cash takes up a lot of space, whereas £1000 in e-money is no more cumbersome than the size of a debit card. Similarly, physical money can be easily damaged or lost, something that isn’t as simple when using e-money.
For businesses, the risk of theft is reduced by not storing cash on site. Services can be carried out more efficiently, as customers don’t need to fiddle through their bag looking for the correct amount of money, and businesses don’t need to hand over change. This reduces wait times. Further, companies can save on administrative costs as they no longer need to cash up at the end of the day, nor go to the bank to physically deposit the money a few times a week.
The COVID effect
COVID-19 acted as a catalyst for these trends. As an incredibly infectious virus which was easily spread, worries developed about the hygienic implications of using cash. To minimise these risks, many businesses chose to become cashless operations, reducing the viability of using cash as a payment method. While some retailers have subsequently begun to accept cash once again, contactless payments are still encouraged, and many consumers now prefer alternate payment methods when compared to pre-COVID.
Further, with most non-essential retailers having shut their brick-and-mortar locations, much more of us are shopping online instead, driving increases in e-money usage. The percentage of UK’s retail done online has doubled over the past year, and studies have shown that nearly a fifth of the population has shopped online for the first time due to COVID.
Finally, legislative change has increased the appeal of contactless payments. Over the past year, the limit for contactless payments has increased from £30, to £45 and now £100. This makes contactless a viable option for more purchases.
What companies are leading the way in the new normal?
- Paymentsense provides small businesses with an affordable payment processing service and software. Their solutions include a variety of different card machines, as well as handling online payment gateways to allow customers to pay online, by phone or through email. Their machines are easy to use, with it being possible to go through the entire process in as little as three days, and by utilisng economies of scale, Paymentsense users often receive the best rates on market.
- Pomelo Pay allows businesses to accept payments from anyone, anywhere (digitally or physically) at a low cost, without having to use hardware. It’s offer allows clients to generate a QR code or unique payment link, allowing customers to pay without use of a card
- Ordo is an open banking enabled, secure end to end request for payment service. Ordo has made the process of billing and paying safer and easier by joining up requesting payments, sending invoices and tracking and reconciling payments on the one side, with making secure and correctly referenced payments on the other side.
- ECOMMPAY is an international payment service provider and direct bank card acquirer, engineering bespoke payment solutions for e-Commerce clients worldwide. Its payment gateway facilitates an omnichannel payment process, combining acquiring capabilities, 100+ payment methods, mass payouts, and technological innovation within a single, seamless integration. It is headquartered in London and has six offices globally, employing over 700+ payment experts
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