Have the events of 2020 sped up the inevitable change of our payment habits?
We humans are creatures of habit. It is said to take just 21 days for a repeated task to become a habit. The past few months we have found ourselves with more time to create great habits to take forward with us into the future.
A lot of things have changed for many of us during the last six months. We are now more aware of what and how much we touch, and with that comes various other changes. In terms of payments, the World Health Organisation suggested people make contactless payments where possible to reduce the amount of contact on cash and on PIN pads. This seemed to be the starter for an effect which has only proliferated. The beginning of which came with the contactless limit being increased in many countries across the globe - in Europe alone, 29 countries raised the limit. In the UK, the maximum was increased from £30 to £45 and although this limit has been higher in other countries for some time (in GBP – Japan, China and Canada have been £130+, £110+ and £50+ respectively since before 2019), the increase in the UK has played a huge part in the uptake in its use. Around 66% of all payments are now contactless in the UK and nearly 5.4 million people almost never use cash.
The UK’s increased adoption of contactless payments has outpaced the rest of the world, being 15% higher than the global average. Figures taken before the pandemic show that 7.4 million Britons were close to living a cashless life, and the current situation will have only fuelled this movement.
So, is this how contactless payments take over and cash dies out? It’s unlikely. Cash was the second highest form of payment in the US and the UK behind debit cards in 2019. Some US cities have passed legislation in recent months to ban the acceptance of card and contactless only payments. Banning the use of cash eliminates a huge number of consumers, for example in the UK in 2019, there were 1.3 million unbanked adults. It is impossible to wipe out the use of cash without completely excluding these people who are solely reliant on paper tender. A 2019 Compass Plus survey revealed that 57% of over 60’s still withdraw cash from an ATM at least weekly, and 40% of millennials are doing the same, showing that cash still has an ever steady presence.
There have been many significant changes to our lives during 2020, how we shop, how we make payments and how and where we work. While it is clear that nothing is certain anymore, old habits die hard – and the eradication of cash is unlikely to come anytime soon.