Does progress of tech­nol­ogy her­ald a world with­out cash?

Con­tact­less tech­nol­ogy has changed the way we pay – and there are more devel­op­ments to come, as Vicky Shaw re­ports

Western Mail - - PERSONALFINANCE -

Smart­phones, on­line and mo­bile bank­ing and “tap and go” con­tact­less pay­ments are rapidly chang­ing the way we pay for things.

Last year, the num­ber of pay­ments made by debit cards across the UK over­took the num­ber of cash pay­ments for the first time, ac­cord­ing to fig­ures from trade as­so­ci­a­tion UK Fi­nance.

The grow­ing pop­u­lar­ity of con­tact­less pay­ments, which al­low peo­ple to make pay­ments of up to £30 with a sin­gle swipe, was a big driver be­hind debit cards over­tak­ing cash. There were 13.2 bil­lion debit card pay­ments in 2017, while 13.1 bil­lion pay­ments were made in cash.

Here’s a look at how the way we pay is chang­ing and what the fu­ture could hold...

HOW WIDE­SPREAD ARE CON­TACT­LESS CARDS IN THE UK?

By the end of 2017, there were nearly 119 mil­lion con­tact­less cards in cir­cu­la­tion, with 78% of debit cards and 62% of credit cards be­ing con­tact­less.

Nearly two-thirds (63%) of us now use con­tact­less pay­ments, the re­search found.

Mil­len­ni­als, aged 25-34, are the most likely to use con­tact­less, with more than three-quar­ters (77%) of this age group mak­ing con­tact­less pay­ments in 2017. And while peo­ple aged 65 and over are less likely to use con­tact­less than younger gen­er­a­tions, more than half in this age group did make con­tact­less pay­ments in 2017.

WILL DEBIT CARD USE CON­TINUE TO IN­CREASE?

Yes, ac­cord­ing to pre­dic­tions. Over the com­ing decade, debit card pay­ments are ex­pected to see a fur­ther surge.

UK Fi­nance ex­pects to see a 49% in­crease, with 19.7 bil­lion pay­ments in 2027, driven by the growth of con­tact­less pay­ments, on­line shop­ping and more busi­nesses be­ing able to ac­cept card pay­ments. There are also ex­pected to be 6.4 bil­lion cash pay­ments in 2027.

HOW WILL TECH­NOL­OGY CHANGE THE WAY WE PAY IN FU­TURE?

The choice of how we pay is widen­ing. Bar­clay­card has re­cently em­bed­ded con­tact­less chips into watches and is cur­rently work­ing with brands to em­bed its con­tact­less pay­ment chip sys­tem – bPay – into ev­ery­day prod­ucts, to al­low peo­ple to pay quickly and eas­ily.

Adam Her­son, busi­ness de­vel­op­ment di­rec­tor, Bar­clay­card Mo­bile Pay­ments, says: “Con­tact­less pay­ments have be­come the de facto pay­ment type of choice for mil­lions of con­sumers. Th­ese are now used across trans­port sys­tems and by the vast ma­jor­ity of re­tail­ers – and shop­pers love them be­cause of the speed, ease and con­ve­nience they bring.

“More re­cently, we have seen a surge in the use of wear­able and mo­bile pay­ments, cre­at­ing new, ex­cit­ing op­por­tu­ni­ties for both shop­pers and brands. Con­sumers are in­creas­ingly able to match their pay­ment ac­ces­sory or de­vice to their life­style or fash­ion taste.”

Look­ing ahead, Ali­son Sa­gar, head of con­sumer, PayPal UK, says: “There is more change to come. Pay­ments are con­stantly evolv­ing, and we will see more changes in the next five years than we have seen in the last 50. To­day, the vast ma­jor­ity of con­sumers are car­ry­ing in­cred­i­bly pow­er­ful com­put­ers in their pock­ets wher­ever they go.

“We are only just be­gin­ning to scratch the sur­face when it comes to smart­phone tech­nol­ogy and the po­ten­tial of smart­phone apps to trans­form the fu­ture of money.”

SO WHERE DOES CASH FIT IN?

There’s still a place for cash – for many peo­ple, it’s an es­sen­tial way of get­ting by day to day. UK Fi­nance says rather than be­ing a “cash-free” so­ci­ety over the next decade, notes and coins will con­tinue to be val­ued and pre­ferred by many. Cash is still ex­pected to be the sec­ond most fre­quently used pay­ment method in 2027 be­hind debit cards.

Many still rely on cash for their day-to-day needs. Dur­ing 2017, 3.4 mil­lion con­sumers hardly used cash at all. But at the same time, a sig­nif­i­cant num­ber – some 2.2 mil­lion – pre­dom­i­nantly used cash to shop.

Gareth Shaw, a money ex­pert at Which?, says: “Clearly the way we shop and pay for ser­vices is chang­ing, but for mil­lions of peo­ple in the UK cash still plays an es­sen­tial role in their ev­ery­day lives. It’s vi­tal th­ese peo­ple are still able to ac­cess the cash they need.”

Robert Me­len

> First Cymru buses in Swansea are now fit­ted with con­tact­less pay­ment sys­tems

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