COVID-19 Advances Move To Cashless Society
COVID-19 Advances Move To Cashless Society
A survey has shown how the need for most people to pay using a contactless card in shops, digital/ mobile and online means for purchases during lockdown may have sped up the move towards a cashless future.
The survey of 2,000 people, by Nationwide Building Society, showed that the average respondent had gone over six weeks without using cash and that the lockdown led to 27% of respondents to use mobile payments and 25% to use online or mobile banking for the first time.
Big Spike In Contactless
Not surprisingly, the survey revealed that in the first week of lockdown, 23 March, 7.15 million contactless payments worth £77.27m were made by Nationwide customers. As the lockdown progressed, there was a substantial increase in contactless payments to 10.31 million contactless payments worth £128m in the week beginning 25 May.
Older People Too
The survey also revealed that 75% of older Nationwide customers (over 55) reduced their cash usage during the lockdown. This appears likely to be due to hardly any physical shops being open anyway, limited or no public transport in many places and online shopping becoming more important for safety and convenience reasons, particularly with many older and more vulnerable people sheltering.
The lockdown appears to have forced older customers to try new payment and shopping routes e.g. Amazon and PayPal and perhaps to discover how easy and secure digital shopping can be.
Use of Cash in Decline Anyway
Before the pandemic, the use of cash had been declining anyway in developed countries in favour of payment-means like contactless, mobile payments and online shopping. For example, for the first time, debit card use, driven by contactless payments, overtook the number of payment transactions made in cash in the UK back in 2017.
Also, Access To Cash research from 2019 showed that cash use appeared likely to end by as soon as 2026, although notes and coins may still be used in 15 years’ time, but only for an estimated 10% and 15% of transactions.
The declining use of cash has also forced the removal of many ATMs, and a move to online and mobile banking has contributed to the closure of many bank branches.
All these factors have put pressure on the whole cash system and have threatened to drive cash out of popular use within 10 years.
The pandemic created a reluctance for many essential stores that were open to accept cash due to possible health risks from its physical exchange, plus the limitations in bank services. Prior to the pandemic, however, many businesses had already developed a preference for cashless operating because of its ease, convenience, speed of transactions, reduced theft risk and the resulting lower insurance premiums.
Many supermarkets had also been ramping up their competition for online grocery shopping.
The pandemic has also helped to expose how many people in society are old, vulnerable, in poor health, and who need to use cash. For example, many poorer and older members of society, and those with mental health challenges rely on cash and may not have a bank account.
Also, businesses in rural areas have always found it more difficult to go cashless in preference of digital payment due to those areas being less well served by broadband and mobile connections.
What Does This Mean For Your Business?
Those businesses that have traditionally dealt in cash and digital/online for payment have undoubtedly seen a massive decrease in cash use, but one thing that the survey results may not show, but the assumption could be made from the results, is that the pandemic may have demonstrated to people that they can carry on without needing to use cash for many products and services. This period of relying on contactless, digital and online payments may turn out to have accelerated the move towards a cashless society as consumers have been forced to try new methods and may have been won-over, and may prefer to carry on this way as much as possible.
Interestingly, Facebook’s WhatsApp has just announced that its users in Brazil can now send and receive money through its messaging app, using a PIN and fingerprint for authentication. This will, no doubt, be rolled out to other countries soon and will facilitate a greater move away from cash towards digital payment methods.
Once businesses start moving forwards again, they should expect a growing preference by customers to use contactless, digital, and online payments.