Company News • 09.05.2016

Does the surge in UK contactless payments hint at cash’s demise?

One in five retail purchases under £30 in the United Kingdom these days are completed with contactless payments. Instead of handing cash to a store clerk or swiping a card, shoppers use "tap and go" cards, smart cards or mobile wallet apps through their smartphones and watches to pay for purchases.

In April 2016, The Telegraph reported that use of contactless payments has risen fivefold in the last year. The newspaper attributed the change to a growing adoption of the payment system by merchants and a September 2015 increase in the limit on contactless payments to £30 from £20.

“Increasing the spending limit to £30 has clearly encouraged consumer adoption and retailer opportunity across Britain; families are now able to do their weekly supermarket shopping and pay contactless; the increase has driven a demonstrable shift in consumer behavior,” Kevin Jenkins, Managing Director in U.K. and Ireland for Visa Europe, told the Telegraph.

Supplier
Logo: APG Cash Drawer

APG Cash Drawer

4 The Drove
BN9 0LA Newhaven
UK
Photo: Does the surge in UK contactless payments hint at cash’s demise?...
Source: APG Cash Drawer

Contactless payments don’t replace cash

While the boost in contactless payments is clearly a sign of the times, as people complete more and more tasks with mobile devices, the question is whether this trend will accelerate the demise of cash. Indeed, predictions that cash will eventually disappear are nothing new, but despite all the movement toward electronic payments, the notion that we are moving toward a cashless society is dubious.

Here’s why: Shoppers who pull out mobile devices to pay for a purchase usually are doing that in lieu of using plastic. In the past, they would have used a card with a PIN or EMV chip to complete the transaction. These users were already predisposed to not carrying cash, so to them, moving to a contactless method is a logical next step from plastic.

Payment card competition

If contactless payments were strictly a cash replacement, why would there be a limit? When you walk into a store and pull out a wad of cash, has any merchant ever said, “We only accept less than £50 in cash?” If anything, you’re likely to see a sign somewhere in the premises saying payment by card transactions require a minimum purchase to help lessen the impending card processing fees retailers are required to pay. Furthermore, some merchants and gas stations even offer a percentage discount when a cash payment is presented—an enticing deal for many consumers.

Some merchants and gas stations even offer a percentage discount when a cash...
Some merchants and gas stations even offer a percentage discount when a cash payment is presented.
Source: APG Cash Drawer

The real competitor to contactless payments is plastic, not cash. This would explain why the £30 limit exists in the first place. If you go over the limit, you’ll have to pay with a credit or debit card if you weren’t going to use cash, anyway. The point of limiting the purchase amount is to benefit the payment card companies.

Card issuers, it would seem, want plastic in wallets just as much as the cash management solution providers want cash in the wallets of consumers. The logical conclusion here is that despite the repeated prognostications that cash is going away, the reality is we are not seeing that – and it isn’t likely to happen anytime soon. Cash-handling technology, therefore, will still be needed at retail stores, and merchants will continue to need cash management solutions for the foreseeable future.

Sign up for our email newsletter to receive more exclusive POS industry news content.

Source: APG Cash Drawer

related articles:

popular articles:

Thumbnail-Photo: Walmart brings the big screen to its parking lots...
14.08.2020   #POS marketing #marketing

Walmart brings the big screen to its parking lots

Retailer’s first-ever drive-in movie theater

Walmart is lifting the curtain on plans for the Walmart Drive-in, a drive-in movie theater experience, which is rolling into 160 Walmart stores across the country beginning this month, created in partnership with the Tribeca Film Festival.Available ...

Thumbnail-Photo: Job maker 4.0: e-commerce
27.05.2020   #online trading #e-commerce

Job maker 4.0: e-commerce

Retail training and continuing education programs are booming

Digitization in retail and e-commerce growth present fresh challenges for retail employees and the retail world. That’s why interest in the new "E-Commerce Merchant" dual vocational training course offered by Germany’s HDE ...

Thumbnail-Photo: 4 tips on how to handle customer complaints
13.08.2020   #consulting #customer satisfaction

4 tips on how to handle customer complaints

How you can effectively respond to negative reviews and use them to be a benefit to your company

Most retailers don’t like customer complaints. Plus, they also mean extra work. Yet ignoring complaints is not a great long-term strategy because any bad customer experience can haunt your brand if it becomes public. That’s why retailers ...

Thumbnail-Photo: Upturn for brick and mortar retail in city centres?...
17.07.2020   #brick and mortar retail #customer relationship management

Upturn for brick and mortar retail in city centres?

Economic development and city marketing about current measures

Bonn's inner city – like all other cities in Germany – is struggling with the consequences of the Corona lockdown. We asked directly on site what support there is from the economic development and city marketing departments. This ...

Thumbnail-Photo: Virtual pop-up stores
29.06.2020   #virtual reality #pop-up store

Virtual pop-up stores

Here today, change Up tomorrow

They spring up like mushrooms, only to vanish again shortly thereafter – pop-up stores are trendy and now they also increasingly “pop up” online. We spoke with Mohamed Haouache, CEO and Founder of Storefront, about the magical ...

Thumbnail-Photo: Retailers say credit insurance plan could increase liquidity during...
15.07.2020   #retail #coronavirus

Retailers say credit insurance plan could increase liquidity during pandemic downturn

Backstop for trade credit insurance

The National Retail Federation welcomed a report released this week calling for a federal backstop for trade credit insurance, saying the proposal could help provide liquidity badly needed by retailers as they recover from the recession brought on ...

Thumbnail-Photo: WhatsApp Business: A direct line to customers...
29.05.2020   #customer satisfaction #customer relationship management

WhatsApp Business: A direct line to customers

About the installation, functions and advantages of the app

WhatsApp is a popular communication channel used by millions of people worldwide. Now small and medium-sized retailers or restaurants can use WhatsApp Business to quickly and easily engage and interact with their customers and build customer ...

Thumbnail-Photo: The Virtual Africa Big Retail Expo 2020 (ABRE 2020)...
06.07.2020   #digital marketing #marketing research

The Virtual Africa Big Retail Expo 2020 (ABRE 2020)

The spotlight is on the emerging trends in the retail industry at The Virtual Africa Big Retail Expo 2020, set to take place on 6th August 2020

The event is scheduled to begin from 0900 EAT till 1400 EAT. This exhibition is the first annual event which is dedicated to discussing the following:How do retailers keep up as the world tries to deal with the enormous pressure to adapt to ...

Thumbnail-Photo: Take a deep breath ...and get back to work!
26.05.2020   #brick and mortar retail #personnel management

Take a deep breath ...and get back to work!

Retail employee break rooms and rest breaks in Germany

Working hard is important, but so is taking proper rest breaks! Whether we spend this time alone or with colleagues, by getting some sunlight and fresh air or by relaxing in designated rooms – we all need to take a break sometimes to relax and ...

Thumbnail-Photo: The importance of effective complaint management...
12.08.2020   #customer satisfaction #customer relationship management

The importance of effective complaint management

A strategic and cross-channel approach to handling negative customer experiences

Customers are more demanding than ever, while brand loyalty is declining. Even a couple of negative experiences can alienate consumers and erode loyalty. Shoppers increasingly share bad reviews and complaints on public communication channels for ...

Supplier

POS TUNING Udo Voßhenrich GmbH & Co KG
POS TUNING Udo Voßhenrich GmbH & Co KG
Am Zubringer 8
32107 Bad Salzuflen