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Our panel of payment experts’ perspectives on the barriers to a truly cashless society

Last week, phos brought together a group of eighteen senior executives from across the payments industry and the professional services businesses that support them, to discuss the issues around our transition to a cashless society.

The last few months have seen an acceleration of the move to contactless and digital payments and away from cash as a means of payment, driven by both consumers’ and businesses’ concerns around health and safety in a post-COVID-19 society. Our CEO Brad Hyett set the scene for the meeting attendees – Accenture predicts that cash usage will decline by roughly 38 per cent in 2020 when compared to the previous year (the average annual decline in the UK from 2015 to 2019 was six per cent). Data from UK Finance’s UK Payments Market report for last year showed that this trend was very firmly in place before the pandemic – almost one in seven adults in the UK used cash just once a month or less frequently. The pandemic has merely accelerated a trend that was already gaining traction.

Deon van Biljon of Stanchion Payment Solutions discussed the impact that this has had not just on consumers, but on the banks that their business works with. He said that large banks that would usually take 12 to 18 months to implement new technology or processes were now doing this in two to three months to meet consumer demand. DIGISEQ’s Terrie Smith noted that a lot of the moves to contactless, and specifically to wearables as a means of contactless payment, were being driven from the ground up by the consumer, and that banks were moving quickly to keep pace with this demand.

All of the group agreed that there are huge benefits for business, consumers, and wider society in moving to cashless. Data that we presented showed that, in addition to the savings businesses could expect to see through the reduced costs of cash management, the UK Government could benefit by as much as1% of GDP, or £26bn. But there remains a significant group of people who have not yet embraced the move away from cash, and who cannot be ignored or left behind. Imogen Jones of Collyer Bristow helped size this market, using recent research she’s conducted with her firm on this same topic. According to her, there are currently 1.3m adults in the UK who do not have a bank account. These “unbanked” consumers need to be considered and their concerns or issues need to be addressed.

Moorwand’s Luc Gueriane pointed out that one of the challenges here isn’t availability of bank accounts, but education as to why they are of utility to consumers. He also touched on the reason that some merchants have a preference for cash – that they are in low margin industries and they don’t want to give any margin away to an acquirer. Settlement times of anything up to a week is just too slow for businesses, particularly in these challenging economic times. This was something that was echoed by John Greenwood of Compliance3; window cleaners, hairdressers and home help were all cited as examples of tradespeople who often promote cash over other payment methods.

Mike Chambers is an ambassador for the Emerging Payments Association and a cashless advocate. He looked at a number of use cases which are often cited as reasons consumers have a preference for cash, such as budgeting, tipping, and donations to charity. In each of these areas, he discussed the availability of efficient and valuable alternatives for consumers, and again the issue of education and awareness was raised.

Ash Sampat of HSBC and Alexander Carter-Silk of Keystone Law both discussed another issue which is regularly raised when discussing the benefits of using cash: the anonymity of cash payment over digital payments. Whilst criminal usage is often cited here, there are many legitimate reasons why people may want a transaction to be anonymous or secret – anyone who has ever bought a future spouse an engagement ring would understand this particular use case, as just one example.

The availability of technology for digital payments was also a common topic of conversation and this is, of course, a key area where phos can help to support merchants who want to make a move to cashless transactions. All those merchants need to do is to download an app to their Android device to start taking contactless payments, without the need for dongles or any other hardware. Add a card issued by our parent business Paynetics, and we can settle and reduce time to cash to the very same day. As with the other solutions to the issues discussed, we need to continue to raise awareness of the benefits of a software POS to merchants, so that they can see the benefits of this technology within their own businesses.

There were some clear themes that resulted from the discussion:

  • Industry needs to think carefully about how the 1.3m unbanked consumers can be brought along on the payments journey.
  • A programme of education needs to be undertaken to help consumers and merchants understand the benefits of cashless.
  • Greater awareness of the tools, product, services and apps which can help with things like budgeting, tipping, donations and payments can help to support this move.
  • As an industry, we need to work together to help promote the benefits, and mitigate some of the underlying issues, of moving to cashless.

Look out for more content on much of the themes and issues raised here on our blog, and if this is something which is of interest to you or your business, please register your interest below. We’d be very happy to include you in the next steering group we run on our transition to a cashless society.

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