How far away are we from a cashless society?
Lloyds recently announced the closure of 200 branches across the UK in a direct response to consumers deserting the high street in favour of digital channels. According to the taxpayer-owned bank’s chief executive, the use of branches has fallen by 15 per cent year on year – yet another sign that we’re moving towards a cashless society at an accelerated pace.
Although branch closures mean unfortunate job losses, the longer-term effect of the cashless society will see retailers freed from the costs of security and the burden of managing floats, change and deposits – a situation that will ultimately benefit consumers.
Already, Nordic countries such as Denmark and Sweden are leading the rest of the world in cashless payments for even the smallest items. They are the proof that the great cashless society experiment will not only benefit us all but it will become the norm sooner than perhaps we realise. Take Sweden for example. According to its central bank, the Riksbank, cash transactions made up barely 2 per cent of the value of all payments in the country last year. In Swedish shops, cash is now used for only 20 per cent of transactions, half of the amount from five years ago, while some 900 of Sweden’s 1,600 bank branches no longer keep cash on the premises or accept cash deposits.
In Denmark, almost a third of the population now uses an official Danske Bank app called MobilePay as a cash alternative. It links a user’s smartphone to till sensors or other people’s phones and was used to make some 90 million transactions last year. More recently, a Swedish app called Swish, has been developed jointly with the country’s major banks including Nordea, Handelsbanken, SEB, Danske Bank and Swedbank. Swish uses phone numbers to allow anyone with a smartphone to transfer money from one bank account to another in real time. Adopted by nearly half the Swedish population, Swish is now used to make more than nine million payments a month.
According to a recent report from global think-tank Fung Global Retail & Technology, the evolutionary speed of mobile payment adoption across Europe could lead to a cashless society by 2030. This prediction is underpinned by high rates of smartphone and bank account penetration compared to Asia and Africa, with nine of the top 15 ranked digital-ready countries located in Europe. In the UK, over half of all online payments are already being made via mobile and with the introduction of Android Pay a few months ago, mobile payment penetration is likely to continue to soar. After all, Google occupies 82 per cent of the smartphone market and with Android’s more simplistic integration with existing NFC terminals, contactless payment adoption will now accelerate and small businesses everywhere will benefit.
To persuade Android users of the benefits of mobile payments, Google launched Android Pay Day at the end of June. The promotion offers Android Pay users discounts once a month on the Tuesday before pay day and has so far included two-for-one on Frappucinos in Starbucks and a £5 voucher that can be redeemed within the Deliveroo app, provided you select Android Pay as your preferred payment method.
App developers are more inclined to embrace Android Pay because of its simplicity and added value to the user experience. If you’re buying something ‘in-app’, with Android Pay you’ll never have to enter your shipping and billing address for online checkout again. Just select ‘Buy with Android Pay’ and the payment is processed quickly and securely.
Due to the way Android Pay is built – allowing for an API that can be coded into supported apps – the service can also access loyalty card information and include it in each transaction, thus further reducing the need to carry around a purse or wallet. This and other mobile payment technology, along with a culture that is spreading like wild-fire across Europe, is sure to keep driving in-app commerce, which in turn will help accelerate our society towards its cashless utopia. The question for businesses and brands is, ‘are you mobile payment ready?’
Dennis Jones is chief executive of Judo Payments