More than half (55%) of UK consumers expect to abandon using cash for shopping in the next two years – with a quarter adopting mobile wallets.
So finds new research, conducted by Paysafe, a leading global payments provider. The report, called Lost in Transaction, uncovered the rapid move towards a cash-free economy with a third (34%) of Britons only visiting an ATM once a month or less, and one in six saying they rarely carry cash at all, with that figure rising to one in five for under 34s. With the research showing two thirds (65%) of people carrying less cash than a year ago, the move away from physical notes and coins only looks set to continue.
The comprehensive study, undertaken in the UK, US and Canada, looks at attitudes to money and consumer buying behaviour, and examines how cash is merging with digital formats. It reveals increased consumer confidence in mobile shopping, the start of a shift to new payment methods such as cryptocurrencies and the potential for retailers to lose relevance without the right payment mix for customers.
The evolution of cash into digital formats is enabling consumers to move away from carrying hard currency, with a quarter (24%) already adopting mobile wallets and 12% using cryptocurrencies for payments. Contactless has paved the way for this new era of payments, with three out of five consumers regularly using it for payment, 69% citing it as more convenient than cash, and 44% stating they preferred to shop in places that take contactless. The mass acceptance of contactless is facilitating more compatibility between retailers and emerging payment methods at point-of-sale, including digital wallets and smartphone apps.
However, there are still hurdles to overcome before more widespread adoption of digital cash plays out, with 68% worrying about the security of contactless, and 58% of consumers being concerned they will be charged the wrong amount when using it. There are also more basic security issues to overcome for mobile wallets with significant concerns around people’s handsets. Nearly a third (29%) of people said they worried about their phone being stolen and over a quarter (28%) did not even want to take their mobile out to pay. This is despite nearly two thirds (63%) saying they are increasingly confident about using their mobile phone for shopping.
Commenting on the research, Oscar Nieboer, Chief Marketing Officer, Paysafe says: “There was much fanfare earlier this year around the 50th anniversary of the ATM, but the much more relevant milestone for payments today is the 10 years since the introduction of contactless payments in the UK. Although slow to establish itself, contactless is changing the landscape in how the public views cash and began its evolution into digital formats. Today, we are seeing the emergence of a cash-free society – people have more ways than ever to spend cash online or offline, and this challenges businesses to reimagine the shopping experience to allow for behaviours and payment models unthinkable a decade ago. They need to look at the next wave of disruption in payment and get ahead of the curve with younger demographics by introducing new payment approaches.”
The research demonstrates that it’s essential that businesses take a diversified approach to how they accept and process payments to accommodate both traditional and emerging payments technologies. That journey starts with merchants understanding how consumers use money, where they use it and which formats they prefer, as the proliferation of different payment methods means customers expect to be catered for when parting with their money. It will be those merchants who seize the opportunities provided by this new normal will be best placed for the next big wave in omni-channel retail.
Interestingly, Somaliland – the tiny East African country that broke away from Somalia – is poised to be the first cashless society on Earth, where mobile peer-to-peer and peer-to-merchant payments are ubiquitous.
According to the BBC, this shift away from cash is in part due to the rapid devaluing of the Somaliland shilling, the breakaway self-declared republic’s own currency which now trades at around 1 USD to 9,000 shillings. A few years ago it was just half that. With denominations of 500 and 1,000 being the most common, just paying for a few groceries can require a wad of notes, while a medium-sized transaction requires a bag stuffed with the currency.