The recent Coronavirus outbreak has altered our lives in many ways during 2020. Still, one of the most significant and potentially long-term changes has been the reduction in the use of physical money. With people now less likely to want to come into contact with banknotes and coinage, the prospect of a cashless society is accelerating exponentially.
No sooner had contactless debit and credit card transactions been rolled out a few years ago, financial experts were debating about how soon all payments would be made electronically rather than with notes and coins. Now, the pandemic has brought that subject back to the forefront of our minds, and in this article, we will look at just how Covid-19 is propelling the need for cashless payments and how this will affect the way we shop in the future.
Has the Pandemic Already Moved Us Into a Cashless World?
The swift rise of cashless payments took many people by surprise. Just as consumers were getting used to chip and pin cards, contactless payments that could be made either by card or smartphone hit an unsuspecting world back in 2010.
In fact, so swift was the rise of contactless payments that the UK media announced in 2017 that digital payments had overtaken the use of cash for the very first time. When Apple launched Apple Pay in 2014 for use with their latest iPhone 6, it seemed as though cash was about to become a thing of the past.
No sooner had the UK announced a lockdown due to the Coronavirus. Banks were upping the limit that could be spent via a contactless transaction from £30 to £45 to help people avoid unnecessary contact when out shopping. So now, those people who had previously baulked at the idea of using contactless payments (especially the more elderly members of society) were beginning to change their habits when it came to paying for goods.
Indeed, the more mature members of society have typically been sceptical about the use of contactless technology, with many considering it an unsafe way of making a payment. However, the increased risk of catching the Coronavirus has caused a seismic shift in this attitude. The need for quick and safe transactions and encouragement from retailers to use this method helping to change consumers’ attitudes.
Ask yourself, when was the last time you used cash to make a payment in a shop or supermarket in 2020? The answer would probably be sometime in January or February, or maybe at the beginning of March before the horrors of the pandemic truly hit home. However, there is no doubt that the outbreak of Covid-19 has accelerated the use of cashless transactions among all demographics.
Even without the pandemic, the number of cashless transactions was increasing year on year, but now, the outbreak has pushed us one or two steps closer to becoming a completely cash-free society.
Does This Mean That Cash Has Had Its Day?
Even though a recent report from cash machine provider Link stated that there had been a fall of approximately 62% in the number of transactions from ATMs even before the pandemic hit, there are still many people who rely on cash to get by.
Therefore, whilst there are still people and businesses that rely on cash, financial institutions must support these people and give them access to the money they require.
A totally cashless society can only be achieved by educating people on living their lives without cash. Until that happens, moving to a fully cashless society will only leave the most vulnerable people in our society behind.
Existing research suggests that as many as 1.7 million people in the UK do not have a bank account and rely entirely on cash daily, with a third of those actually declaring it a preference. This will need to be addressed before the idea of having a 100% cashless society is even suggested, and that could take some time.
What Does the Rise in Contactless Payments Mean for Businesses?
Whilst moving a company’s finances to a digital format can be a daunting prospect for some business owners, the changing behaviour of the modern-day consumer has made it a necessity. Having a digital payment option is no longer just a luxury. Modern businesses need to survive in a crowded marketplace.
Nevertheless, the fact that there are usually fees connected to processing debit and credit card payments means that some business owners have typically shied away from embracing the ability to process card transactions. Despite this, financial experts state that the modern consumer is more likely to spend more per transaction via a digital method than physical cash. The increase in profits will far outweigh those transaction fees.
Obviously, the Covid-19 pandemic has had a dramatic effect on how people shop, and it has also accelerated the prospect of a totally cash-free society becoming the norm in the near future. Using a contactless card or shopping over the internet has now become a fixture in most people’s lives, and when the pandemic is over, that is one thing that is unlikely to change.
As the pandemic hopefully eases in the coming months, it will be interesting to see just how much of a comeback cash payments make, as going digital is still not an option for many people. But, the big question is, will those people who were dedicated cash users who have now switched to digital payments ever return to using cash for the majority of their purchases?
To become a totally cashless society, there needs to be much more support and education, especially from businesses, as people will need to learn how to live in a world where paying by cash is no longer an option. So do not expect to see a totally cashless society just yet.