The UK is experiencing a shift when it comes to consumer purchasing. Long gone are the days where ‘cash is king’ with card payments beginning to creep up as the preferred payment method over banknotes and coins.
As we begin to embrace the fact that consumers will be paying in cash less, businesses need to ask themselves; What impact would a cashless economy have on my business? Here are four key things to consider:
Will physical stores still be relevant?
Consumer shopping habits are changing. We’re seeing a rise in online stores at the expense of the high street. Whilst this growth may be a cause for some concern, the general consensus is that there will still be a place for high street stores in the future. Although physical stores will still have a presence, it‘s worth noting that traditional retailers will need to adapt to meet changing customer demands.
Ecommerce already provides a market for consumers who want to use alternatives to cash online, such as debit/credit cards, PayPal, and other electronic payment methods. However, as the UK begins to cut down on cash spending, we may see a rise in services such as click collect and ‘try before you buy’ to allow physical stores to better compete or at least co-exist with ecommerce retailers.
With more and more businesses realising that ecommerce is now a necessity to satisfy customer demand rather than a ‘bolt-on’, we expect to see a rise in SME retailers investing in their online operations in addition to their stores.
Is Chip & Pin becoming redundant?
Going cashless isn’t all about just accepting a traditional debit/credit card. Businesses will also need to embrace new payment technologies, particularly with the rise in contactless payments on mobile devices, tablets and smartwatches.
UK Finance reports that, in 2017, 1 in 3 of all card payments were made using contactless, and the number of businesses acquiring contactless terminals grew to 500,000. Customers want to be able to shop quickly and effortlessly. They don’t want to wait around and are more and more beginning to expect contactless as a payment method.
Will we become more security conscious?
Whilst cash is by no means the most secure method of payment, card and other transaction methods also pose risks. There have been cases where large companies have had sensitive customer details stolen, including details relating to payment cards.
Businesses may need to consider reviewing their security infrastructure to ensure it is robust enough if a cashless economy becomes a reality to mitigate the consequences and risks that can be associated with electronic payments.
An increase in prices?
Businesses already have to pay transaction fees on purchases made by card. A combination of cash and card payments may have lessened the burden on businesses before, but if consumers decide to abandon cash altogether, it‘s possible we will see an increase in prices so retailers can cover the costs of increased card payments. Whilst card payments can incur costs, the cost of not implementing card payments is greater, with over £12bn per year being lost by small businesses for not adapting to electronic payments.
With the UK coming up third on the list of countries that use the least amount of cash, retailers need to consider the prospects, consequences and benefits if the UK begins to move towards becoming a cashless economy.