The media would have us believe that we are speeding towards a complete cashless society. However, there are still considerable obstacles preventing the nation from fully embracing this transition. A lack of trust and acceptance of new payment technology has led to an unwillingness to adapt to the proposed changes and is one of the key hurdles, amongst others, that must be overcome, if the UK is to successfully make this transition.
Whilst research suggests that debit cards are the most popular payment method in the UK, it is forecasted that 8,000,000 UK adults (17 per cent of the population) would have difficulty in adapting to the proposed concept of a cashless UK. These adults are made up of several vulnerable demographics, for example, those with physical and/ or mental health difficulties, the less wealthy and those individuals that lack bank accounts. Consequently, the decline of cash payments could prove to be a significant obstacle to overcome for some individuals throughout the UK.
It is clear that although the UK as a whole has been rated among the nations most ready to go cashless3, some residents are clearly readier than others.
As things stand, a cashless UK would exclude a large number of people.
So, what are the greatest barriers to the UK’s cashless society and how can they best be tackled?
The UK’s dependency on cash
With almost 500 UK cash machines being removed from service each month , cash is getting harder to find.
Disadvantaged groups are more likely to rely on cash and some, such as those who do not have a bank account, have little choice but to use cash for everything. In 2017, people in the UK made more than 13 billion cash payments1. The choice seems clear: either ensure the continued availability of cash or make it easy for all members of society to go cashless.
Other countries have tackled this. For instance, Sweden has positioned itself as the front-runner to becoming a truly cashless society. In fact, four out of five purchases in Sweden are made electronically, and Sweden’s central bank, Riksbanken, estimates that between 2012 and 2020, cash in circulation will have declined by 20–50 per cent. What can the UK learn from Sweden? Although Sweden experienced similar reservations regarding transforming into a fully cashless nation, from certain groups that are dependent on traditional currency, Riksbanken also emphasised that the answer lies in making sure that cash services are still provided. This would suggest that the ideal payment balance lies in offering people freedom, even if physical currency becomes rarer.
The Indian government has also pushed the cashless agenda in an effort to tackle corruption and crime, and to draw in millions who currently live at the margins of society . One element of this is Aadhaar, a digital identity/authentication that relies on fingerprint biometrics . When linked with bank accounts or other methods, Aadhaar lets users authenticate payments, regardless of their literacy, income or access to formal banking.
A similar use of fingerprint biometric payment smart cards could overcome several of the problems we see in the UK. For example, the fool-proof authentication built into biometric pre-paid cards, could help those currently unbanked to build a credit rating and gain access to products and services previously beyond reach.
The best of both payment worlds
When asked why they use cash at all, UK residents give a range of answers. These include convenience, trust and choice issues1. People like having a choice of payment and for that reason (as well as several others), the complete demise of all physical currency in the UK is still several years away. Even those who are happy to use cashless payments like to have cash as a back-up, while those who generally favour other forms of digital payment (PayPal, mobile wallets, etc.) have cards for the same reason.
It is important therefore that trust in card payments is reinforced by banks and merchants alike. Where cash payments are currently preferred due to increased convenience, the obvious response is to make card payments as easy and trusted as possible.
Where trust is a problem, this is often because consumers don’t trust banks, the internet or the infrastructure needed to make cashless payments work1. This has a certain situational irony, because cashless payments are actually far more traceable than cash. Yet some consumers remain wary: they need to be reassured that card payments are secure.
Here, biometrics are useful once more. While a signature can be forged and an online account hacked, a fingerprint is virtually impossible to replicate. What is more, consumers are used to seeing biometrics used in places where security is paramount, such as airports; they trust biometrics as a gold standard.
Cards with built-in biometric authentication help customers to overcome trust issues around digital payments. They are also, therefore, likely to help financial organisations who wish to draw in the sceptical consumer by reassuring them.
Preparation will be key
The Access to Cash review concludes that cash is unlikely to disappear from the UK completely, and that there are important reasons to keep it in circulation. However, it seems reasonable, given recent trends, to believe the use of cash will continue to fall and the use of alternatives, specifically payment cards, will rise. It seems likely that the UK will ultimately become mostly, as opposed to completely, cashless, but preparation is key, and the transition must be well supported. Rural areas must be sure they are able to access electronic money transactions, for example.
Fingerprint biometric smart cards can provide UK consumers with a much safer method of payment, putting those with current concerns around payment and banking security at ease. Examples of the movement towards a cashless UK can be visible in every environment. It is even being implemented into younger generations, with students paying for their lunches through the use of biometric cards in many schools now.
David Orme, Senior Vice President, IDEX Biometrics Asa
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