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CASHLESS SOCIETY

28.09.19

Have you ever found yourself feeling frustrated when your shopping total comes to £30.01? Not because you’re obsessive about round figures or even numbers, but because it means manually punching your pin number on the pad to make the purchase. You’ve surpassed the £30 limit for contactless payment, and are now cursing the fact you forgot your trusty Bag for Life, but for all the wrong reasons! 

At some point in the last few years, those nine or ten seconds saved at the checkout have become sacred. Gone are the slow, primitive days of putting pen to paper to sign for your spending. We’re living life in the fast lane now and our banks better keep up!

A summer outing to the Big Smoke to see Celine Dion in concert at Hyde Park for my wife’s birthday hammered this point home. The British Summer Time event is sponsored by Barclaycard, so it’s no surprise to expect their presence to be felt around the festival site. What I hadn’t expected, however, is that their promise of a seamless payment experience extended to every single trader and outlet, no matter how big or small. 

Every merchandise, food, drink or ice cream stall had the technology in hand to take chip & pin and contactless payments resulting in faster transactions and shorter queuing times. In fact, the payment process was so much smoother than previous event experiences that it made me question why “real money” is still in circulation at all?

Barclaycard first introduced us to contactless payments over a decade ago, in 2007, and since then an estimated 112 million contactless cards have been issued in the UK from a multitude of providers. With one in three payments now contactless, it’s not hard to envisage that the days of counting out coppers are seriously numbered. In June 2017, purchases made by card surpassed cash for the first time and it’s nigh impossible to expect a reverse in that trend any time soon. 

The average monthly spend in the UK using contactless technology is £4.3 billion. Considering the £30 limit for contactless payments is relatively low, this huge monthly total signifies the sweet spot of convenience shopping – consumers purchasing low-value items, quickly and easily.

And it’s not only shoppers that have benefitted. In September 2014, the London Underground began accepting contactless payments, with over 300m contactless journeys undertaken in the years since. On the busiest travel day of 2015 – Friday 18th December – a whopping 1.24m journeys were completed by over 500k unique contactless cards. There’s a lot to be said for avoiding the queues at the ticket office or topping up those pesky Oyster cards when you’re running late for a meeting.

Even the Church of England are getting in on the act, having trialled electronic collections plates in a dozen of their churches. Utilising portable handheld terminals - designed in collaboration with technology firm SumUp - churches have reported a staggering 97% increase in donations.

As with all advances in technology, though, there is a downside. Contactless payments aren’t always subject to the same security scrutiny as more expensive purchases are. If your card were to be lost or stolen, anyone could use the contactless functionality unless you report it missing and have it blocked by your bank. For this very reason, it is abundantly clear why the £30 purchase limit is in place.

The original payment limit of £20 was increased to £30 per transaction in September 2015. Yet as with most ground-breaking technologies, users are rarely satisfied for long. It is the same reason why fibre broadband has been developed. Why Amazon Prime Now exists for one-hour same-day delivery. Why supermarkets offer home delivery. Consumers have had a taste of the simplicity of contactless payments, and are hungry for more. Surely it’s only a matter of time before the limit increases again. Perhaps to £50, maybe even £100? Maintaining the careful balance between speed and security is, however, undoubtedly a troublesome task. 

Apple may have found the solution to this with Apple Pay. Contactless payments made via NFC in our phones and watches are then authenticated via FaceID. In theory, this a much more secure process than a four-digit PIN or signature ever could be. But, for now, implementation of this security on the merchant side seems to be wildly inconsistent by retailer and country so it may still be some time before we have the confidence that contactless can be used for higher value transactions.

For over 55s and low earners especially, there are major concerns that they could be left behind and struggle to cope in a cashless society. In March 2019, The Guardian shared findings from a survey of 3,000 consumers, detailing how 74% of those aged 55-plus and 57% of low-income earners have never used mobile banking apps. Moreover, an Access to Cash Review found that 80% of people in Britain still use notes and coins across large parts of the UK economy, from paying taxi drivers and newspaper sellers, to window cleaners and gardeners.

However, many of those surveyed indicated that they would like support in embracing digital channels, suggesting a lack of confidence and “know-how”, rather than a fundamental refusal to adopt new processes.

 

I think it’s sometimes easy to forget how daunting technology can be to the less digitally-savvy among us. For many older generations, newspapers are delivered and read over breakfast, not consumed during lunch breaks on microscopic screens. Sending letters in the post is more personal than @ mentions on social media. Face time is meeting a friend for a cup of tea and a chat at a favourite café, not a video conferencing platform… 

Sweden is expected to become the world’s first truly cashless society, with a study by Stockholm’s KTH Royal Institute of Technology predicting notes and coins will be eradicated there by 2030. That is still over a decade away. Expecting everyone to join the cashless revolution easily is simply not realistic. Some members of society cannot change; others will choose not to. Either way, we can expect cash to be around in these parts for a fair few years to come.

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