By Udo Mueller, CEO paysafecard.
As an increasing number of consumers are adopting alternative form of payments, from contactless cards to mobile wallets such as Apple Pay and Google Pay, it’s fair to say the role of cash in the payments landscape is evolving. Despite cash still being king for many consumers, this has not prevented some from asking whether, and indeed when, there might not be a need for cash at all in the future.
For some small retail businesses, there is an argument that the dramatic reduction in cash-paying customers means that the benefits of not accepting cash outweighs the lost business of turning cash-only customers away. The administration associated with collecting, recording, and depositing cash into the bank, as well as the security threat of keeping legal tender on a shop’s premises, is resulting in small businesses in countries such as the UK turning down cash payments entirely.
Discriminating against the cash consumer
According to the UK’s Financial Inclusion Commission, 1.5 million adults in the UK remain unbanked. A further 2.2 million adults remain reliant on cash for day-to-day spending. This highlights the demand for businesses to open their tills to readily available cash that many are wanting to put back into their local economies.
Though there is data showing the overall reduction of consumer usage of cash, it doesn’t tell the full story. For those 1.5 million unbanked consumers, the phasing out of cash from the payments’ ecosystem would be extremely damaging due to its exclusion of those that cannot, or will not, pay with any other method than physical currency. And this dichotomy is replicated across Europe; while cash usage might be predicted to decline across Europe generally close to 40 million EU citizens still do not have a bank account.
With this in mind and looking further afield, cities such as Philadelphia and San Francisco in the US are already implementing bans on merchants refusing to accept cash. Legislation has been proposed in many other US cities and even states to follow suit.
More recently campaigners in the UK have called Chancellor Rishi Sunak to save banknotes and coins, saying without urgent new laws the cash system could collapse within a decade mirroring the reasons legislators in the US have started to implement changes. Consumer advocates such as the European Consumer Organisation are beginning to propose that EU-level legislation should be put in place to guarantee that consumers have a non-discriminatory right to access and use of cash. This legislation would also address the decline in cash dispensing machines, which is a further issue squeezing the ability of the cash consumer to make payments.
eCash as a non-discriminatory payment method for the digital economy
As momentum in the UK and potentially throughout Europe gathers to demand regulation and protection to ensure the shift to digital doesn’t leave millions behind – or put the economy at risk – a close eye needs to be paid on the associated repercussions beyond directly impacted retailers.
If European and UK legislators do move to protect cash consumers by introducing regulation that guarantees the right to make payments in cash, this will undoubtedly affect how merchants in the digital economy accept payments.
While there is an unlikeliness that any regulation that gets pushed through would guarantee that cash acceptance would extend to online transactions, many businesses are increasingly conscious of the opportunity to market online goods and services to cash-dependent consumers. And if the rights of consumers to continue paying in cash is protected in law then merchants can feel more justified making the investment of integrating eCash solutions into their online checkout in the knowledge that cash consumers will not be forced out of existence.
With cash still remaining the main method of payment for a healthy percentage of consumers, who are also demanding access to digital products and services, it’s vital to give consumers the right to pay for these services with cash. Simply because it makes financial sense.
Even in Sweden, which is the country with the lowest dependency on cash in Europe, the consumer appetite to go completely cashless isn’t evident at the moment. Despite the significant increase in using digital payment options in recent years, this trend appears to be bottoming out in Sweden, where the cash in circulation actually increased for the first time in 2018 since 2007.