Is the prospect of a cashless society becoming more of a reality in today’s market?We do not expect cash to simply disappear, but we do believe that by 2015 the number of non-cash payments will for the first time exceed the number of cash payments.
Why are we seeing a decline in traditional payment methods?
Technology has had a major influence on our payment habits. As we have become more attached to certain payment methods, such as plastic cards, for the convenience that they offer, it has meant that other payment types - namely the cheque have declined in popularity. Decisions made by retailers to stop accepting cheques, in response to consumer behaviour, demonstrate our change in payment preferences.
How is the credit crunch affecting the number of payments in Britain?
Looking at spending in 2008, total debit and credit card spending was up in 2008 in terms of both value and volume, increasing 6.8% and 7.4% respectively. We are seeing an increase in use of debit cards because spending rose from £224bn in 2007 to £245bn in 2008, whilst spending on credit cards rose only slightly from £123bn to £126bn. This would suggest that credit card holders are becoming more mindful of making repayments. In 2008, debit card spending accounted for 73.5% of all plastic card purchase transactions in 2008.
What challenges do suppliers/retailers face in pursuing cashless innovations?
With any new payment technology, you can always expect it to take some time before users feel comfortable to change their habits, and retailers have to take expenditure into consideration. However, we are confident that the contactless proposition will suit particular retailers, especially those who appreciate speedy transactions.
What schemes are available to encourage retailers and consumers to accept the new technology?
The acquiring banks involved in these early stages of rollout are working with retailers on an individual basis to encourage take-up of the new technology and a variety of incentive schemes & awareness campaigns are underway. MasterCard and Visa are supporting the banks in this work. In the future, growing numbers of consumers will see contactless technology functionality added to their cards, and as more retailers adopt the technology cardholders will be able to take advantage of this new payment option.
What benefits does prepay offer to the consumer over traditional cash payment?
As with all cards, a major benefit is the ability to make payments where and when you need without having to worry about other factors, such as finding a cash machine. Also, some cards can be registered so that you can cancel it should you lose it. This is a major benefit because with cash, if you lose it, it is gone forever.
So what’s the future for cash?
Nobody is suggesting that cash will simply demise. At present there are occasions where cash is simply the most appropriate payment option, and until these gaps are filled by other alternatives, cash will remain.
(Smartcard News Ltd, 2009)
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