Covid-19 has changed many things about how we live our lives. One of the most enduring changes going forwards is the acceleration towards the UK becoming a cashless society. This is a trend that has been coming for several years. But the coronavirus pandemic has meant that our reliance on contactless or card payments has increased significantly in a short space of time.
So has Covid-19 played a major part in moving us towards a cashless existence? And what does that mean for the future of payments?
Has Covid-19 moved us into a cashless society?
There is no denying that contactless and card payments have been growing in popularity in recent years. With most credit card and debit cards now having contactless capabilities, the ease in which you can complete a transaction has helped this particular payment type to grow and grow.
When the coronavirus outbreak began, the contactless payment limit was increased to £45. And shops actively encouraged consumers to use this option in order to limit the spread of the virus.
In Capital On Tap’s recently released white paper ‘The Future of Finance’, CEO of JISP Julian Fisher comments “everything you thought couldn’t change, has or is changing”. Whereas previously we may have occasionally used contactless payments, or sometimes relied on online shopping, lockdown and social distancing measures forced us to change our behaviour.
Alastair Thomson, Finance Director at FD Centre, also asks in the paper “when was the last time you used cash to pay for anything, or didn’t pay via Contactless or an app like Apple Pay for example? They existed before but the uptake has been greatly accelerated due to Covid-19”.
And that is the point to make. These forms of payment have been in existence for a while. But widespread adoption hadn’t yet occurred. In fact, some people saw them as a unsecure way to pay. However, the greater threat of catching Covid-19 through touch points, the need to quickly complete transactions and the encouragement from retailers to use contactless helped to change this attitude.
While cashless payments were likely to continue to steadily grow in popularity, the coronavirus pandemic accelerated this trend. In reality, it has pushed us one step closer to becoming a truly cashless society.
Does this mean the end of cash payments?
There is no denying that our reliance on cash has dramatically fallen. Link reported that ATM transactions fell by 62% year-on-year at the start of lockdown.
But there are still people that rely on cash and their local bank branches. In fact, John Natalizia, CEO at Snoop, commented that “while people still need cash, it’s essential they are still able to access it so no one is excluded from participating in the economy”.
And this is an important takeaway. Despite Covid-19 moving the UK towards being more of a cashless society, while there are still people and industries that rely on cash, finance providers and businesses need to support them.
Ian Johnson, Managing Director at Marqeta, highlights this in the paper. “To go cashless, we must educate society to show everyone how to live in a world without cash. Until this has been addressed, going cashless risks leaving the most vulnerable in our society behind”.
What does this trend mean for businesses?
So how can businesses and retailers adapt to support the move towards a cashless society? As CEO of VINCO Felicia Hjertman puts it, “It is no longer just an option to have a digital solution, it’s a core requirement”.
As Capital On Tap comments, “making the big leap from moving your finances to digital format can be scary for many business owners”. However, the change in consumer behaviour and attitude has made it a necessary step.
As processing card transactions can mean fees, some traditional businesses have shied away from introducing card-processing capabilities. As Richard Wagstaff, CEO of Degree 53, points out: “In reality, people are likely to spend more digitally than with cash, so the benefit far outweighs the transaction fees”.
It is apparent that the coronavirus pandemic has accelerated the trend towards a cashless society. Using contactless, making a card payment or doing our shopping online has become an integral part of our spending behaviour.
As lockdown continues to lift, it will be interesting to see whether we will see the return of cash. For some, digital banking apps and cashless payments just aren’t an option.
In order to move into a truly cashless society, education and support from businesses is key. People need to be shown how to live in a world without cash. And there needs to be solutions from businesses that will encourage them to use cashless transactions.
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