While the banks and payments industry reap the benefits of a continued rise in cashless spending using contactless cards and mobile wallets, fuelled by savvy initiatives from giants such as Google Pay which propel them ever closer towards a cashless society, concern and disappointment is sweeping across the UK’s 167,000 charities, who now face a worrying challenge. Dr. Neil Garner, founder and CEO of mobile proximity payment and marketing platform, Thyngs, shares his insight on how, by harnessing NFC technology, smarter charities can tap into the contactless age.
As cashless spending using contactless cards and mobile wallets continues to rise, people are carrying less cash than ever before. In a study by Mastercard, 43 per cent of adults in the UK said that they carry less cash than they did two years ago. Contactless spending, on the other hand, grew by 166 per cent in 2016, with more than half of adults in the UK making a transaction in this way at least once a month. Contactless spending using smartphones is also on the rise: Worldpay estimates that mobile wallets account for 22 per cent of all online payments in the UK.
Whilst this may be great news for banks and the payment industry, for the UK’s 167,000 charities – who raise £9.7 billion every year from the public, a large proportion of which comes from cash collections – it is a significant cause for concern.
Research from Barclaycard confirms the problem: one in seven people have admitted to walking away from a possible donation because they didn’t have any cash on them, with charities potentially missing out on more than £80 million each year.
With contactless card and mobile payments becoming the norm, it’s clear that charities need to up their game and give supporters ways to donate that reflect these new payment preferences.
Contactless charity collecting devices are being hailed as the solution. Several systems have appeared on the market, from handheld card readers that connect to a mobile phone to bespoke stands and displays (and even cars!) with contactless card units built in. And the early results have been promising. A trial by Barclaycard in early 2017 raised £20,000 over three months, with the average contactless card donation being three times higher than the average cash donation made using the same collecting box.
The problem is that these systems are still beyond the reach of many but the largest fundraising budgets, with an individual contactless donation unit costing as much as £450. And – despite the headlines – the returns are modest, at best. The Barclaycard trial, for example, involved 100 contactless ‘buckets’ which, outside that pilot, would easily have cost £25,000 – more than the amount they actually raised. Few charities can afford to wait three months before seeing any kind of return, even if they could justify the investment required in the first place.
A rewarding experience
There are other problems with contactless donations, too. Firstly, they are incredibly impersonal, so to draw the donor in and provide any kind of instant reward they need connecting to some kind of display or other experience, which adds even further to the cost.
Secondly, the opportunity for engagement beyond the donation is limited; if a charity wanted to keep a contactless donor updated on their work, for example, a bespoke solution would be required to capture their details.
Thirdly, it is currently impossible to add a Gift Aid declaration to a contactless donation as an integral part of the payment process. As Gift Aid is effectively free income added to taxpayers’ donations by the UK Government (to the tune of £3.7 billion in 2016/2017) it is vital that charities make it as simple as possible for supporters to give this permission.
Finally, the cost of contactless devices, and the fact that they need a power source, a data connection, and a secure location or ‘minder’, means that they simply cannot be used at scale.
No wonder then that charities being sold the promise of contactless are coming away disappointed once they start to analyse the costs and limitations. Luckily there are some simpler, more affordable ways for them to tap into the rise in alternative payments.
As smartphone-based digital wallets continue to gain ground on contactless card payments, some commentators believe that their biometrics and convenience will spell the death knell for the debit card. Data from Nationwide would seem to support this; the bank reported a 365 per cent increase in mobile payments last year, and commissioned research confirming that its customers believe their smartphones will replace debit cards, credit cards, and cash within the next six years.
The speed and convenience of these payments isn’t limited to shopping either. Research from Moneymailme suggests that 72 per cent of 18-25 year olds are willing to use their mobile phones for charitable giving, and in March 2017, Apple partnered with 22 large UK charities to let iPhone users pledge donations using Apple Pay.
By adding a low-cost NFC chip or QR code to a collecting box, shop window, direct mail appeal, or even a volunteer’s ID badge, charities can offer anyone with a smartphone a simple, affordable way to make a donation, and generate a much better return on investment as a result. A simple tap of the phone brings up a confirmation screen that allows the supporter to donate using a mobile wallet like Apple Pay, Android Pay, or PayPal, then add Gift Aid and provide their contact details – all without having to type a single thing.
This approach provides a more viable alternative for charities looking to benefit from cashless giving, but who are unwilling or unable to invest in contactless card systems.
It also addresses many of the issues associated with contactless terminals:
- it can deliver a personalised experience via the mobile phone screen;
- it can extract contact details from the mobile wallet, making it easy for a donor to give consent for both Gift Aid and follow-up communication;
- and the low cost means that the technology can be deployed at scale, providing more opportunities for donors to give.
We believe that smart charities will ultimately use both: contactless card systems in low volumes for specific events and campaigns; and cashless mobile systems in high volumes embedded across all their day-to-day donor touchpoints.
Regardless of the option chosen, how they implement these services will dictate whether they succeed or fail. Awareness of the cause, what they are asked to support, and how they are asked, are all still just as important.
Dr Neil Garner, Founder and CEO of Thyngs
Image Credit: Jonas Leupe / Unsplash