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We have all seen it over the past few years, less cash purchases, more card transaction and with the latest increase in contactless payment limits, it is now even easier to use cards in all retail outlets. But the question is, what does this mean for the consumer over the coming years?
Last year, 2014, the volume of card transactions surpassed cash ones for the first time, largely driven by contactless payments. It was famously once stated that The Queen doesn’t carry cash with her, are we all finally following suit?
The pressure is not just coming from new technology, but is now being driven by the cost of cash. Most economic commentators are forecasting a rise in interest rates which will increase the cost for retailers to handle cash, from around 0.2% to 0.3% of value. This in turn will have an impact of profit margins for retailers, most of whom are already struggling to maintain profitability.
This pressure is going to necessitate a change in strategy by the retailers. Some are already looking at ways to change the purchase process with customers - you only need to look as far as London Transport, where contactless payment cards can now be accepted at Oyster payment points. But a further question that will need to be asked is what impact will these changes have on customer behaviour?
Will we see a point soon where the paying by cash will cost more than by card?
Probably. Or when will we see the first cashless retailer? There will still be a significant group of the population who will be reluctant to drop cash, just as there has been a reluctance to stop writing cheques. However, the cheque is almost dead and it is more than possible that cash will follow in its footsteps. Those retailers that are progressive are already looking at how to manage this transition, those that don’t will suffer the same impact as those who didn’t embrace the internet, they will possibly see reduced sales and reduced profits.
There are many new payment channels begin tried and tested including “Cryptocurrencies” such as Bitcoin and with more retailers opening up to this possibility, the face of payments is sure to change in the coming years.
Our thoughts are that retailers need to be engaging customers in the change now to ensure that when the costs do become prohibitive, it is an easy step to move to a cashless system.
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