Are we Witnessing the Death of Cash in the UK?
One of the side effects of the current crisis is that is accelerating trends that were already happening in fintech. This is explicit in a number of areas of the ecosystem especially in payments; where the handling of cash for obvious reasons is being actively discouraged and we are seeing a rise of card usage. LINK, the UK’s main cash machine network, has revealed transaction volumes have dropped around 60 percent on average when compared to the same time last year*. This trend has been encouraged by the government and UK regulators who when the lockdown started quickly increased the limit of contactless payments to £45.
What one needs to assess in looking into this question is whether this is a short term reactive trend that like questionable haircuts from home (don’t ask), will disappear once whatever the post lockdown ‘new normal’ is, or whether we will witness a long term rise of contactless payments. Further to this once the ‘gig economy’ returns whether micro payments will now be made digitally. Are we moving into a new world without the fivers and tenners?
This is a central theme of the first day of PayTech Connect Digital our online conference taking place next month. I asked two leaders in their field who will be discussing this topic in a panel on 16-18 June. Here is a preview of their thoughts but expect much more meat to the bones when you sign up to listen in June.
Martin Parry, Senior Product Manager at Skyscanner is quite pragmatic in his opinion; clearly seeing the impact Covid-19 is having on current trends, saying: ‘Payment method adoption by consumers is driven by a number of factors, a key one is acceptance by merchant. The current situation has changed this dynamic as a number of POS have withdrawn acceptance of cash. It remains to be seen how this will change consumer habit once acceptance returns.’
Adam Davis, Delivery Lead at 11:FS goes further seeing a paradigm shift taking place that can only be accelerated by the effects of COVID-19, stating, ‘The growth of smartphone use, mobile and online banking, contactless payments and digital-only financial providers have all seen cash use decline. COVID-19 brings a new dimension to the arguments for removing physical cash - convenience, security, lower processing costs - that of physical wellbeing. Demand for digital payments tools, which enable businesses to accept electronic payments is likely to continue to grow at pace as customers seek a contagion-free methods of payment.
As we curb the use of physical money and the payments infrastructure evolves with it, we must recognise the disproportionate impact this could have on vulnerable groups in society. Many still rely on cash and risk digital exclusion if we move too quickly towards becoming cash-free. Ensuring the benefits of digital banking and electronic payments are well-understood must be a priority for governments and banks to ensure that people become more comfortable with using less cash in their day-to-day lives and avoid getting left behind.’
Both Martin and Adam will be joining other merchants and payments luminaries and PayTech Connect Digital, our NEW online event which reimagines the future of payment innovation and will be running from 16-18 June. The online event will bring the sector 9 hours of digital keynotes and panels from the world’s foremost thought leaders in payments. Over three days, they will help 2,000 of the ecosystem make sense of what is the ‘new normal’ in paytech.
If you are interested in finding out more, you can visit the website to register free.