Coping with a cashless economy

It’s said that in the next 20 years, the UK will be a cashless society and across the pond, almost two-thirds of Americans believe the USA will also be cashless within their lifetime. With this trend happening across the globe, perhaps the age-old saying 'cash is king' could soon be long forgotten.

Cashless is now king

The figures speak for themselves. In the first quarter of this year alone, a total of 88.1 million contactless cards were issued in the UK – a 35 per cent increase on last year – and during 2015, around £633 million was spent using contactless technology. It is unsurprising, then, that Payments UK found that debit cards are now being used for over half of transactions, with notes and coins making up just 45.1 per cent of payments.

This widespread adoption of digital payments resides not only with the fact the technology meets consumer demand for convenience with its ‘tap and go’ nature, but there are also a number of ways we are able use it. For example, the introduction of Apple Pay and Android Pay in the UK has resulted in more and more consumers reaching for their phones to pay for goods and services instead of using old-fashioned cash. In fact, the use of Apple Pay amongst iPhone owners grew nearly fourfold in a year, growing from 12 per cent last year to 47 per cent today and in the US, Apple Pay now claims 3 of every 4 contactless payments.

With these quick and efficient payments methods becoming more and more popular, cash is quickly being regulated to the side lines -so much so that it is estimated by 2021, debit cards and contactless payments will overtake cash usage to be the UK’s most frequently used payment method.

Dealing with downtime

However, as consumers increasingly leave their wallets behind, there are some key considerations merchants and financial institutions need to address. A dependency on cashless payments goes hand in hand with an increased pressure to ensure transactions made through websites, mobile apps and connected devices all run as efficiently as possible, without any glitches. And this can prove tricky when you consider that all digital transactions and updates are reliant on resilience and availability of the public Internet.

For example, what happens in a period of downtime, especially if retailers stop taking cash as a form of payment? In short, both parties suffer. For the merchant it’s a loss of revenue, and potentially customer loyalty. For the consumer, it’s the inconvenience and frustration of not being able to purchase the services they want. For example, imagine you are filling up with petrol and connectivity to make a payment fails and there’s no other alternative method to pay – what happens then? While outages are an obvious issue, latency is also something that needs to be closely monitored. Expectations from consumers start and end with quickness and reliability – delays because of Internet performance issues only raise doubts about quality and can damage brand trust with every transaction.

The cashless society is inherently dependent on rapid and reliable connectivity and any risk of digital transactions suffering downtime or delays needs to be completely eliminated. In the UK last year, around £114 billion was spent online and in this new age of digital dependency, businesses must consider the consequences that result from Internet traffic spikes and outages, with loss in revenue being a big one. For example, Yahoo found that a server delay of one second leads to a 2.8% drop in revenue, whilst Amazon revealed sales decreased by 1% for every 100 milliseconds of latency. This shows how revenues are directly dependent upon speed, performance and efficiency for organisations selling online.

Managing performance

With that in mind, merchants and financial institutions need to ensure their payments technology ecosystem is protected to mitigate against the risk of delays and downtime to be best prepared to support electronic payments and services through the digital supply chain. Any business wanting to protect revenues and provide an exceptional digital experience in the cashless society must ensure a well-executed Internet Performance Management strategy is in place to support the company’s ability to monitor, control and optimise online infrastructure. This applies to a range of industries from banks offering their customers apps to mobile payment providers such as Apple Pay and also retailers who find themselves no longer exchanging cash for goods.

That said, the Internet is a complex and unpredictable collection of networks and its changeable nature makes it difficult to manage, especially in peak times. But the Internet is not uncontrollable with the right tools in place. With proper Internet performance management solutions in place, payments providers and merchants , can meet customer expectations by delivering fast, scalable, secure and reliable assets via any digital channel, regardless of time or circumstance. By having visibility and control of the entire digital supply chain payments providers can ensure that all transactions are completed. Businesses that don’t make Internet performance their priority forfeit delivering the best customer experience and consequently could not only suffer a loss in revenue but also damage the brand’s reputation.

Companies in the payments supply chain have an opportunity to leverage the Internet and make it their competitive advantage. This can only be achieved by having visibility of the end-to-end transaction process and the ability to control paths to optimise performance. The key to succeeding in a world where cash is no longer king is to be prepared for any issues that may arise in the payments process, and be confident in the company’s abilities to react and remedy any problems, so that customer experience is not affected. Because, in the cashless society, it is the customer that is king.

Paul Heywood, MD EMEA, Dyn

Image source: Shutterstock/Tyler Olson