Spiros Theodossiou, VP of Product Strategy, Skrill
It has been announced in Denmark that the Government will scrap the obligation for retailers to accept cash and that as of next year, businesses like clothing retailers, restaurants and petrol stations will no longer be legally bound to accept cash payments. This comes as Danske Bank has revealed almost a third of Denmark’s population uses its banking app, MobilePay, as the Danish population becomes one of the fastest to embrace mobile payments.
In the UK, the latest data from Halifax suggests the British are catching up with their Nordic neighbours. The bank recently revealed cashless payment transactions has increased to account for 83.4% of all current account transactions, with the use of cash and cheque payments nose-diving. According to the report, cash withdrawals now make up just 16.6% of the bank’s current account transactions, a reduction of 8.3% compared to 2014. It all points to UK consumers beginning to favour newer forms of payments over the more traditional methods of cash and cheques.
In research Skrill conducted, we found more than half (54%) of UK consumers now often or always use digital wallets to pay for goods or services online. Younger people in particular are showing signs of abandoning cash for other popular methods with more than one in ten (14%) of 18-24 year olds now using digital wallets for every purchase they make online. Further to this, nearly three quarters (73%) of this age group have now used a digital wallet to make an online payment at some point.
This rise of digital payments coincides with technological developments such as increasingly sophisticated mobile devices, larger Wi-Fi hot spots, and the deployment of 4G, meaning it’s never been easier for consumers to start moving away from cash.
However, the prospect of a totally cashless society in the UK remains some way off. New research from Ofcom has shown that while Brits are spending more time online, we have become more wary about online security compared with 12 months ago. After a spate of high-profile data thefts at consumer brands, 21% of people said they would never share their credit or debit card details online, up from 13% in 2013. This is primarily due to concerns about the security of mobile applications.
It would seem that whilst consumers are experimenting with new forms of payments, concern over potential security issues has tempered their willingness to reveal personal details on sites they do not totally trust. In light of this, the onus falls back on businesses to clearly demonstrate their security credentials and further build a level of trust with the paying public.
Technology is having a huge impact on the way consumers are now choosing to pay. The move from Denmark proves how certain societies are leading the way to becoming truly cashless, yet in the UK there is still a lot of work to be done before we can meet the same level of adoption. Nonetheless, the idea that cash is king is certainly being questioned and we can expect to see that crown slip in the years to come.