As a society, we have seen a lot of changes to the way we operate in our day-to-day lives. However, one of the biggest alterations we’ve had to deal with is undoubtedly the shift towards making the UK into an entirely cashless civilisation. We are filled with questions about the state of our future finances, such as: will conversion rates decline? What is CFD trading and how will it impact the economy in the years to come? How can we get the most out of our money? Whilst we don’t have all the answers, let’s explore the future of cash in our society.
This change in the use of cash has been in effect for some time now, way before the dawn of the most recent pandemic, but these uncertain times have most definitely accelerated the process. We now find ourselves relying on contactless or card payments to make the vast majority of our transactions, finding that our fistfuls of paper money and coins suddenly have less use.
But, how exactly has Covid-19 pushed us towards a cashless society?
Contactless and card payments have grown massively in popularity over the years, with almost all major credit and debit cards offering a contactless option to their customers. We are now so used to just being able to tap and go, that a lot of us have probably forgotten our pin numbers completely!
Pre-pandemic, we could only use contactless payment for charges under £30. But now, when the need to utilise cashless transactions is at an all-time high, the new limit has been boosted up to £45 per transaction, further eliminating the need for cash payments. You may also find that shops will literally refuse to accept legal lender, in an attempt to keep all physical contact between staff and customers to an absolute minimum.
CEO of JISP, Julian Fisher, aptly commented on the change of the way be make transactions, when speaking to Capital On Tap for their recently released paper The Future of Finance:
“Everything you thought couldn’t change, has or is changing”.
Where before, we may have used contactless payments here and there for convenience, or made a few online shopping orders when we’re in a pinch, we now find ourselves relying on these methods, with lockdown and social distancing measures forcing our hand.
Ordinarily, the use of contactless payments was more of a generational thing. Younger people, who find themselves living most of their lives online, would be more likely to tap their card, or whip out their phone to use Apple Pay. Widespread use of these methods has increased massively since we were hit with the predicament of Covid-19.
Is this really the end of all cash payments?
There’s no doubt that our reliance on cash has now dramatically fallen. It’s been reported that across the country, ATM transactions have fallen by 62% year-on-year. With that being said, there are still a lot of people who rely on cash, and the help of their local bank branch, to manage their finances. Because of this, it seems very unlikely that physical currency will be completely eradicated.
Going back to the commentary in The Future of Finance, Ian Johnson, Managing Director at Marqeta, the online card issuing platform, insisted:
“To go cashless, we must educate society to show everyone how to live in a world without cash. Until this has been addressed, going cashless risks leaving the most vulnerable in our society behind.”
How will this effect businesses?
With the gradual phasing out of cash transactions, businesses and retailers may find themselves scrambling to support this move within society. This is so much the case that having a digital solution is no longer an optional feature, it’s become a core requirement.
The Capital On Tap paper understands that:
“Making the big leap from moving your finances to digital format can be scary for many owners.”
But the facts remain that it’s the only way to keep up with the modern client or customer. A lot of traditional businesses have continued to shy away from offering card payment facilities, due to processing fees. However, as you can imagine, allowing card payments, especially in times as trying as these, will then result in more customers, and more profits.
So, what now?
Clearly, the coronavirus pandemic has had a big effect on the acceleration of transforming our surroundings into a cashless society. With the need to keep physical contact to an absolute minimum, using contactless, standard card payments and shopping online has become a crucial part of our lives.
As lockdown begins to lift in some areas, it’ll be interesting to see if a return of cash begins to happen. The only way in which we could all move forward into a truly cashless society would be with further education and support, for both consumers and businesses. If people are shown how to function in a world without cash, then the prospect will be less daunting, and therefore, more possible.Updated Date: 15 October 2020, 11:55