2020 has been quite a year for business. With restrictions seemingly flip-flopping every couple of weeks, creating any semblance continuity has been almost impossible for business owners.
However, one notable outcome from the pandemic has been the almost wholesale shift to a cashless society.
For larger retailers, this shift isn’t likely to disrupt their trading, as they’ve typically adopted card payments sooner than smaller independent businesses. However, SMEs may have stuck to a cash-only option up until now – meaning they’ll need to invest in card machines.
A new uptake
Card payments have increased by three-quarters during the COVID-19 pandemic, due to fears over handling cash. In the period from 1-17 April, card payments went up by 75.3% year-on-year and ATM transactions fell by 39.9%.
It’s a trend that was already in motion before the crisis, but one that has been massively accelerated as a result of it. Shoppers are embracing alternative methods of payment that don’t involve cash or touching card machines, which is arguably why Apple and Google Pay have seen an uptake in usage this year.
Contactless payments can be made on purchases above £45 on devices with Apple and Google Pay enabled, as they use two-step authentication – often biometric identity recognition.
The rise of contactless
Contactless card payments were already the preferred method of payment for many of us.
Tapping our card, phone or smart device had become the norm when making purchases up to a value of £30.
But with the introduction of the increased contactless payment limit to £45, there has been a rapid jump in uptake. According to Barclaycard, a total of 43% of in-store transactions between £30 and £45 are now contactless.
Not only is it a measure that is helping reduce the spread of COVID-19 in retail environments, but it also significantly reduces queuing times. Meaning a speedier service for customers and greater potential profits for merchants.
In the longer term
It’s anticipated that this shift from cash to card is going will only accelerate, with many more businesses now opting for ‘card only’ payments. As card payments become more accessible and flexible, carrying cash becomes increasingly unnecessary for some demographics.
However, as this tilt continues, it will be important for the FCA to work closely with ATMs and the Bank of England, to ensure access to cash is supported for those that require it.
Consumer expectations have changed decisively, and it’s down to merchant’s to provide the options they demand.
Safety may be the current driving force behind this new direction, but ultimately convenience will be the motivator beyond the pandemic.