There was once a time when small businesses would only accept cash as a means of payment, but many of those same businesses are now replacing traditional tills with contactless technology as tech-savvy consumers demand quicker and easier cashless alternatives.
Indeed cashless payments are no longer a luxury but a customer expectation.
Debit card payments leapfrogged cash as the most popular form of payment in the UK for the first time according to data published earlier this year, 12 months sooner than expected. Hardly surprising given there are now more than 100 million contactless cards in circulation.
According to industry figures from UK Finance, British consumers used their debit cards 13.2 billion times last year, up 14% from 2016, while the number of cash transactions fell by 15% to 13.1 billion during the same period. Over the next decade, the number of cash payments is predicted to halve to just 6.4 billion, the equivalent of 16% of all transactions.
Amid the rise of payment apps such as Monzo and Apple Wallet, businesses – no matter what size – need to prepare for a cashless future or risk being left behind.
With churches now using contactless technology to take donations and a number of Big Issue vendors and buskers doing the same, there is no excuse for smaller businesses.
Out with the old, in with the new
Tech-savvy consumers are the future, according to Bosh McKeown, the CEO and co-founder of independent London-based coffee chain The Attendant, and he doesn’t want to be left behind.
The Attendant operates across four sites in Central London and made the transition to a cashless operation in April after analysing a number of data points and recognising the most popular demographic that was walking into its store.
“Our cash payments continued to decrease rapidly year on year, so we’ve known for a while that we wanted to go cashless, we just needed the guts to go and do it,” McKeown says.
As well as improving processes for staff, he says going cashless sets his venture apart from competitors because it has the ability to attract and retain modern day consumers who prefer the speed and efficiency of a contactless world.
Alison Sagar, marketing director and head of consumer at PayPal UK, argues that while the younger generation is often assumed to be driving the “cashless revolution”, in reality, there is little difference between age groups and how they choose to pay. She also suggests businesses should accept all forms of payment.
“Our research shows that in the next year, nine in 10 shoppers over the age of 55 are planning to shop using their smartphones, either the same amount or more than shoppers aged 16 to 24,” she says.
“The speed, ease and security of digital payments benefits everybody, regardless of their age. Our advice to businesses is clear – it’s not about committing to cash-only or cashless, but about offering as many methods of payment as possible to make life easier for customers.”
The future of cash
The UK is fast becoming one of the most cashless societies in the world, but it has a long way to go to catch up with Nordic countries such as Sweden, which are leading the revolution. Barely 2% of payments in Sweden are made in cash and according to research by Capgemini that figure is expected to decline to less than half a percent by 2020.
In the UK, Wales is leading the way to a cashless society with 46% of shoppers preferring to pay by card, compared to the national average of 37%.
However, cash isn’t dead and buried just yet.
A study carried out by Censuswide, and commissioned by Square, found just 17% of British shoppers are card-only consumers, an only 38% of people describe themselves as card-first shoppers – meaning they would typically try to pay with a card first before paying cash.
Additionally, half of small to medium-sized enterprises in London still don’t take card payments, perhaps surprising given small businesses are expected to grow 35% on average in the Capital during the next 12 months.