Thursday, May 21, 2015
'Plastic Will Do Nicely,Sir'
The UK Payments Council today stated that the use of cash by consumers, businesses and financial organisations fell to 48% of payments last year. This means that cashless payments have overtaken cash payments for the first time in the UK. The cash volumes are expected to fall further by 30% to some 34% over the next 10 years. It is claimed that 4.4% of adults ‘rarely use cash and the average ATM withdraw has fallen to £67. The previous cashless payment by cheque has dropped to just 1% of consumer payments whereas Debit card payments have now become universally accepted and account for 24% of payments.
We all have seen the emergence of credit and debit cards and now the attraction of Paypal to many who simply don’t want to input their card details every time they buy something. Even small value transaction such as a cup of coffee are increasingly done by cards and often contactless cards. Interestingly the migration to plastic has not resulted in a price increase or price differentiation by the retailers. The acceptance of Paypal has been significant catching out many traders who first balked at the higher service charges.
However, Denmark is moving closer to becoming the world's first cashless society, with the government proposes scrapping the obligation for retailers to accept cash as payment. They are proposing that as of next year, business such as clothing retailers, restaurants and petrol stations should no longer be legally bound to accept cash payments. Some 30% of the population uses an official Danske Bank app called MobilePay, which is similar to Google Wallet and other contactless cards and links a mobile to other users' phones or to a sensor at the till, allowing you to confirm payments with a simple swipe on your smartphone's screen.
The Nordic countries of Denmark, Sweden, Norway, Finland and Iceland lead the world in cashless payments and in and Sweden in 2013 a bank robber left empty-handed, after he found out that the Stockholm bank he held up did not carry any cash..
What is interesting in the UK is to look at the proportion of cash payments by sector in 2014.
It is easy to understand low basket value retailers such as discount and convenience stores, pubs and newsagents handling cash (68%, 78.5%, 83.9% and 84.8% respectively), and high ticket retailers such as electrical stores, petrol stations and supermarkets handling significantly less cash (33.8%, 24.5%, 43.8% respectively. However the odd segment identified was Bookshops with 45.5% cash transactions which says that they are low value and maybe more convenience than we think.
Whatever, it is clear that the move to cashless is accelerating and with it comes the increasing risk of fraud and transactional payments to third party system and service providers.