Last year the majority of payments made in the UK were made by card. Cash payments have dropped by 4% in 3 years, as the rise of phone, internet and electronic payments continues.
The latest research suggests that 59.4% of UK citizens think that the UK will be cashless soon, with 12% thinking it will be achieved in 3 years. It seems that young, middle class women are driving this change, such that 4% of people think physical money will be obsolete in two years.
Although it looks like the UK could achieve a cashless society very soon, the cost of cashless for many businesses is simply too high.
In 2016, 38 million mobile contactless transactions were made, this equates to £288 million spent. This is an increase of 247% on the year before. Trends such as this are actively encouraged by Visa, one of the two dominant card networks, and the company aims to drive the use of contactless even higher.
Visa recently offered a £10,000 incentive to move businesses to cashless, in line with the US scheme which encourages SMEs to use only card.
Whilst individuals might see this as ever more convenient, the cost to small businesses is growing. Small retailers, builders, restaurants and market traders are just some of the SMEs which would be affected. Typically these businesses do not have the funds to meet the high merchant fees required to cover the card-reader terminals, to complete the fraud checks and basic transaction service.
The interchange fees on each transactions could be hard to justify for the small businesses. Where previously the merchant fees were passed on to the customers for small value transactions, this will no longer be allowed after January 2018.
It looks like the costs to small businesses will hold the UK back from moving to completely cashless for the foreseeable. Particularly as the Bank of England estimates 5% of the population is reliant on cash. However, with technology increasing so rapidly and the move towards cashless increasing, we might reach it sooner than the surveys predict.
For further information about moving your business to the cloud, card payments options and integrating your PoS system and accounts, please contact Suzanne Daly.