Cashless after Covid?

The appetite for contactless and digital payments has rapidly accelerated under the Covid-19 pandemic. With cash increasingly falling out of favour, Julia O’Reilly asks whether we’re entering the cashless era

The jingle of coins jostling in a pocket. The crisp texture of a new ATM dispersed note. Both encompass the sensual encounters we’ve been having with cash for decades. Encounters that are fast fading into memory, as digital wallets and payment cards gain momentum in the marketplace.

As Covid-19 spread, so too did global reluctance to handle coins and notes when cashless payment was a viable option.

Research from the Banking and Payments Federation Ireland found that at the end of April, 43% of consumers made weekly payments via their smartphones. ATMs gathered dust from lack of use when cash withdrawals shot down 56% in a six-week period.

To aid the transition - given that contactless payment was best practice for both retailers and consumers - the contactless withdrawal limit was increased in April of this year from €30 to €50. The response was instant. May saw the highest monthly figure on record, for contactless payments in Ireland: €600 million.

‘On the way out’?

For all that, the transition has been a long time coming. Cash use has been in decline since the last quarter of 2019. A study commissioned by One4All before Covid-19 broke, found that half of Irish adults use digital banking or contactless payments more often than they use cash. According to the same study, 25% of respondents used smartphones to make contactless payments, 10% said they “never carry money,” while 43% believed that cash is “on the way out.”

That trend is undeniable. According to research firm, GlobalData, Finland is the furthest along the road to a cashless society, with South Korea, Norway, Sweden and China lining up behind them. Ireland was placed eighth overall in terms of electronic transactions, boasting the most frequent use of cards across the globe.

Now, months into the ‘new normal’, we are inching ever closer to a cashless society reality. And, reality it is, as if recent research from PayPal is anything to go by, the future will likely be cashless. Of 2,000 Irish consumers studied, 39% said they do not want to use cash post-Covid-19. That translates to over 1.9 million consumers expressing an aspiration to ditch the cash. Add to those, the additional 65% who said they believe a cashless approach is important in these times and the trend is unmissable, especially when we take into account that 61% of shoppers that use contactless payments, said they “try to avoid touching a card reader pad when making purchases”.

Commenting on the PayPal survey results, Annette Hickey, vice-president for EMEA

‘Tellingly, 88% of participants in a 2019 Dublin Mint Office “Contactless transactions are the safest and most practical solution for customers in the study said the move towards current climate.” a cashless society will leave While card in lieu of cash unanimous concern around safety usage is actively encouraged behind the vulnerable, which in many stores, behind the includes the elderly, the scenes, retailers are bearing homeless, the unemployed, an unfair cost burden. Speaking to ShelfLife and even children. magazine, Ann Martyn, customer services, PayPal said: “As well as Co. Laois, said she has seen implementing measures to help facilitate “a large increase” in cashless socially distanced shopping, businesses need to usage since the beginning enable people to purchase goods in different ways in-store or, alternatively, buy online.” of the ongoing health crisis. “Increased usage equates Ann Martyn, owner of Centra, Mountrath in Co. Laois and Convenience Stores and Newsagents Association (CSNA)

A heightened awareness of germs is partially to increased cost to the Executive member, believes “the overall cost imposed by card behind the shift towards cashless. It doesn’t seem to matter that the World Health retailer,” said Martyn. “As a retailer, my concern issuers to retailers is way too high, particularly for stores with a large volume of low value purchases”

Organisation has stated that handling money about this, going forward, Pointing out that a transition to a cashless poses no greater risk than touching most other is the cost to the retailer. The overall cost society will require reliable broadband surfaces where the virus may live. Shoppers imposed by card issuers to retailers is way too nationwide, Lonergan adds: “Down time will and businesses alike have turned to cashless to high, particularly for stores with a large volume cost business. We have already seen that happen reduce the risk of transmission. of low value purchases. It’s a very large cost and recently with the banks. When IT systems go one that is increasing all the time.” down, business is lost.”

Touchless retail Change is required. According to Martyn: Nobody could deny he’s right. Both Bank

It’s not just cash that consumers are wary of “The Central Bank needs to review these of Ireland and Ulster Bank suffered outages in using. New research from retail innovation charges more regularly. Or perhaps they could recent months. However, it’s not just patchy agency Outform suggests that there is a real consider a ‘fixed charge’ when a limit is reached. broadband that causes problems, security issues demand for touchless retail in a pandemicFor some retailers with Cash in Transit Deals, do too. stricken world. Participants of that agency’s the cost of lodging cash is actually less than the Some are wary of the digital trail cashless survey favoured augmented reality try-ons, plastic fees.” transactions leave behind. While the lack of voice-activated solutions, and mobiletraceability and anonymity of cash activated self-checkout options. Onepose known problems, in this age of in-four believed appointment-only surveillance and data accumulation, cash browsing would make shopping safer. consumers appreciate that only they are

“The survey showed an almost aware of how they spend their dosh. owner of Centra, Mountrath, among shoppers,” said Simon Vulnerable

Hathaway, MD EMEA at Outform. Tellingly, 88% of participants in a

“The statistics demonstrate a clear 2019 Dublin Mint Office study said call for touchless retail as people the move towards a cashless society seek to avoid physical interactions will leave behind the vulnerable, which with products within the retail includes the elderly, the homeless, the environment. unemployed, and even children.

“There’s an undeniable awareness A further 68% claimed to be ‘against’ - and excitement - that a return to the idea of a cashless society. physical retail ‘as normal’ has to take While this study was published when place, but our stats show shoppers John Paul Lonergan, national vice-president of the CSNA and owner the world looked wholly different than are looking for retailers to invest in of Spar, Fairview in Co. Dublin, says card charges need to “be it does today, the concerns raised have touchless tech and find new ways for simplified and made more transparent” proven to be warranted. Which? research them to interact with brands in-store.” backs it up. It found that as Covid

Clearly, the way we interact with the world “Banks and card providers need to engage 19 accelerates the move to a cashless society, around us has changed, and public opinion has constructively with retailers around the costs vulnerable individuals have indeed been left shifted alongside that. The safety-first mindset and charges that go with card payments,” said with no way to pay for essential products that we have become accustomed to living in is John Paul Lonergan, who owns Spar, Fairview, and services. unlikely to change anytime soon. Co. Dublin, speaking to ShelfLife magazine. Of course, many are still reliant upon cash. “Retailers have seen significant increases in Nearly half of those are over 65 years of age,

Cost concerns the cost of doing business with the move to while nearly a third are in the 55 to 64 bracket.

For consumers, banks have made efforts to card over cash with most cards attracting vastly Two thirds of those who depend on cash have make contactless payments more accessible. different charges. This has to be simplified and no digital skills. Over a third are likely to be a

While AIB shelved plans to introduce a 1c per made more transparent.” vulnerable customer, with 42% having physical transaction charge on those payments when “As a retailer, I broadly welcome a move to or mental health challenges. Let’s remember

Covid-19 hit, Bank of Ireland announced it card payment,” added Lonergan, “but there are that many in low-wage, irregular employment was waiving its contactless fees. At the time, many factors that need to be looked at carefully are paid in cash. Yet, Which? noted that 10% of

John O’Beirne, director of products, AIB said: if this is going to be a positive change.” shops now refuse to accept it. n