How the Pandemic Pushed Forward Digital Payments
Since the outbreak of COVID-19 not only in the UK but around the world, an increasing number of people have turned their back on cash in fear of transmitting the virus and are instead favouring cashless payments.
The push for cashless payments is not only coming from businesses who want to ensure they are as COVID secure as possible for their staff and customers but from consumers too. Many consumers are opting to pay for everything from groceries to petrol and other household essentials with their debit card using contactless payments or a digital wallet such as Apple Pay and cryptocurrencies.
This demand for cashless payments has accelerated the worldwide transition to digital payments and is modernising the financial industry. In their infancy, digital payments such as contactless were not always favoured by consumers with many questioning how safe they were, and early adoption was slow.
But in a world where digital has become king, it’s no surprise that we are seeing digital payments being pushed forward. Businesses up and down the country responded quickly and ramped up their availability to accept digital payments and Visa eased restrictions on contactless transactions by increasing the payment limit from £30 to £45 in the UK.
Although no formal links have been made with handling cash and the transmission of COVID-19, the advice to wash your hands after handling coins and notes and asking people to pay using contactless where possible was enough to drive the adoption of digital payments.
According to research from data firm Dynata, the UK is leading the race in going cashless with just 12% saying they prefer cash payments. Before the pandemic, 50% of UK citizens said they preferred cashless payments, since the outbreak this has increased 9% to 59%.
While it is not believed that cash will be totally eradicated, or certainly not in the near future, its use is definitely in decline even if only temporary. Cashless payments rely on individuals having access to a bank account, digital wallet or a mobile device that is able to support mobile money services. According to the Financial Inclusion Commission, approximately 1.5 million adults in the UK do not have a bank account.
Another challenge to overcome is older generations who rely on cash on a daily basis. Many older people will not have access to or the know-how to use digital payments and in many cases, they will be suspicious of modern payment methods such as contactless.
Closures of high street banks and building societies in many towns across the country have already made it harder for the older generation to manage their finances, removing cash would only further compound the issue and leave many vulnerable.