Trend Of The Week: Cashless Future

For many of us, coins and paper money are beginning to feel like distant memories. Before the pandemic, cash was used for 80% of transactions in Europe. However, now in effort to reduce transmission of the virus, contactless payments reign king. Card providers have increased contactless payment limits to help shoppers avoid the dreaded pin pad. Even in Italy, where cash payment has historically remained resolute, there has been an 80% jump in e-commerce transactions. According to data from Square, the number of cashless sellers in the UK increased from 10% to 60% over the first months of the pandemic. UK Consumer watchdog, Which?, also reported that 1 in 10 people were refused service in a shop for attempting to pay with cash during this time. The idea of a cashless society is becoming more of a lived reality.  This has prompted thoughtful conversation about the dynamics of access and which parties stand to benefit the most from this shift. 

Overall, Ireland ranks 10th in the EU for digital transactions per capital. One4All research in Ireland revealed that half of Irish adults opt for digital payment over physical tender. 1 in 10 respondents, in fact, say they never carry cash.  This is most pronounced among those aged 18-36. 67% of people in this cohort say that they expect ‘all retailers to accept digital or contactless payments.’ Cashless payment has had a lot of momentum over the years with a steady stream of newsworthy developments. It is reported that many beggars in China now use QR codes to solicit alms. St Vincent de Paul launched a ‘tap to donate’ feature for its Christmas collections in Ireland last year.  Cashless wristbands are phasing in at many music festivals and holiday resorts. AIB’s ‘Tappy’ premiered at the Kaleidoscope family festival last June. Swedish ‘biohacking’ companies have even begun implanting microchips into people’s hands for the next frontier of seamless payment. Amazon Go Grocery, which opened its first store in Seattle this year, removes the checkout process entirely. Using cameras and sensors, items are automatically charged to a customer’s online account, allowing them to ‘just walk out’ of the store.  Another big win for cash-freedom is Atlanta’s Mercedes-Benz Stadium, home of American football team, the Falcons. After becoming the first professional sports venue to go 100% cash-free, they achieved a $350,000 savings and became a model to many businesses considering the same. 

While many people might be tempted to understand a cashless future as yet another natural evolution in a tech-driven world, the reality is much more complicated. A mass movement to cashless can be detrimental without the right infrastructure. The US, for example, is currently facing a ‘coin shortage’ due to stagnant circulation. It also exacerbates economic exclusion when those without the resources to participate in the cashless economy see their alternatives dry up. It is often the most vulnerable in our society, such as victims of domestic abuse, who rely on access to cash. Approximately 1.2 million people living in the UK are unbanked. A fully cashless society effectively enforces a social segregation among low income earners, older people, and people without legal immigration status or without reliable internet access. It also speaks to the dilemma of corporate influence as people increasingly become reliant on banks and card issuers who theoretically could assert more control over their transactions than paying with cash would allow.   

There is debate among experts about whether a world without cash is feasible. Nonetheless, Fintech is chomping at the bit. And, even though there has been no explicit scientific evidence, perceptions that handling money is an unnecessary, germy encounter, could cement behaviors and consumer expectations for years to come. Together this piles onto the momentum. A future with significantly less cash is here sooner than expected and looks likely to stay 

Sources: 

https://www.nytimes.com/2020/07/06/business/cashless-transactions.html 

https://www.ecb.europa.eu/pub/pdf/scpops/ecb.op201.en.pdf 

https://www.bloomberg.com/news/articles/2020-07-14/the-costs-of-an-increasingly-cashless-economy 

https://www.wired.co.uk/article/sweden-cashless-society 

https://www.forbes.com/sites/jonmarkman/2020/05/24/pandemic-rings-death-knell-for-paper-cash/#be2a9b05072e 

https://www.theguardian.com/money/2020/jun/24/you-cant-pay-cash-here-how-cashless-society-harms-most-vulnerable 

https://www.irishtimes.com/news/consumer/cashless-world-will-we-be-richer-or-poorer-for-it-1.4192721