If we are not very careful the move towards a cashless UK may well mirror issues apparent in that most cashless of countries, Sweden. Specifically, the UK may find itself adopting an uncoordinated approach to a cashless society as is now evident in Sweden.
And at the same time, ride roughshod over consumer choice.
It is not in dispute that the use of mobile payments is growing at a phenomenal rate.
But UK consumers or at least a large number of the population want to retain the option to use cash.
At the same time, they want to retain the option to use their debit cards and not find that mobile payments become the norm.
It is not in dispute that whenever contactless payments are launched, there is immediate consumer appetite.
Let me take you to Edinburgh for a contemporary example, where as it happens the writer spends most weekends.
1 million taps in one month on Edinburgh buses
Local transport operator Lothian Transport debuted Scotland’s first contactless and capped’ transport payment system on 24 July. The timing was impeccable, coming just a few days prior to the start of Edinburgh’s Festival season.
The impact of launching contactless was immediate and in its first month use of the service soared past the 1 million mark. Contactless use is already running at 45,000 taps per day.
Meantime at least, users retain the option to use cash on Edinburgh public transport if they wish. And as I witnessed on two unbearably overcrowded trains north from London to Edinburgh on the second and third Fridays of the festival, it remains premature not to keep some cash in one’s pocket.
On both trips the train operator LNER made tannoy announcements to say that ‘their systems were down’. The result: around 1,000 passengers on each train could only use cash if they wanted to visit the onboard buffet/shop. I can confirm as a regular on the service that such announcements are made quite frequently.
LNER is doing a great job in introducing a new fleet of trains. It is doing less well when it comes to its card acceptance on board on a reliable basis.
Almost five hours on a train without refreshments is a non-starter. So if you happen to be planning a trip on LNER, take some cash.
There remains ample evidence that the elderly and lower income groups rely disproportionately on cash. And while the number of free UK ATMs has dropped below 50,000 from about 55,000 just two years ago, the total number of UK banknotes in circulation is at a record high.
Cardless society consumer concerns
We hear plenty about consumer concern about a cashless society but what about the prospect of a cardless society?
Research released by IDEX Biometrics on 3 September notes that three quarters of UK consumers are concerned about the UK becoming a cardless society. A lot of consumers remain very conservative in their outlook and quite simply want to choose their method of payment.
IDEX key findings report that only 20% of all UK consumers believe the UK should already be a cashless society. Moreover, six-in-ten people would not give up their debit card in favour of mobile payments. Meantime 68% of respondents to the IDEX report state they still feel more secure using their debit card than a mobile payment.
On these figures there is an argument that UK consumers are actually more worried about the idea of a cardless society, than a cashless one.
Debit cards versus mobile payments
For more than a third (37%) of consumers, as long as they have a debit card, the thought of a cashless society doesn’t bother them. Maybe not surprisingly, this is even more pronounced among young consumers. Only 53% of 25-34-year-olds are unworried about our growing cashless society. But and here is the caveat – providing they still have a bank card.
In fact, despite the increasing popularity of smartphone payment apps, six-in-ten (60%) respondents would not give up their debit card in favour of mobile payments. This caution is likely stemming from security concerns. A further 68% state they still feel more secure using their debit card than a mobile payment and half (50%) of consumers concerned that contactless payments are insecure.
However, four-in-ten (41%) would trust the use of their fingerprint to authenticate payments from their bank card more than a PIN. This figure remains consistent across all age groups, highlighting consumers’ confidence in payment cards secured by biometric authentication.
Misuse of mobile payments is another major concern for consumers. 58% worry that if they lost their mobile phone, people would be able to access their bank accounts. In contrast, even if stolen or lost, a biometric bank card can’t be mis-used without the owner’s fingerprint.
The need to future-proof payment cards
With UK consumers showing continued attachment to bank cards, it’s time for the financial services industry to future-proof payment cards.
Customers remain sceptical about mobile payment apps and require more protection than a PIN currently provides.
As the owner’s fingerprint needs to be present for biometric payment cards to work, reliable bank cards enhanced with biometric technology will prevent misuse and card fraud. The consequence is enhanced reassurance to consumers as the UK continues to progress towards a cashless society.