Given the high rate of technology adoption, internet use, and the pervasive practice of shopping online from the comfort of your home, it isn’t surprising that card payments are on the rise.
Research published by Euromonitor International showed that transactions completed using credit, debit, and other types of card payments eclipsed cash payments worldwide for the first time in 2016.
While global patterns gradually progressed to an all card, no cash approach to business, it is important to identify why this trend is catching fire in all corners of the world. Among these, particular attention needs to be paid to millennial attitudes and spending habits, which will be discussed in this article. These trends have significant effects on businesses and impact the way stores operate and sell their goods.
Additionally, by considering other factors such as widespread internet use and the appeal of secure transactions, we will perhaps come to an understanding on why cards are fast replacing liquid cash, and how these bear an effect on businesses.
One of the leading causal factors, as identified above, is the prolific use of the internet and its services across all age groups. It’s not just millennials and the budding youth of Generation Z that turn to the internet, but a considerable portion of older generations as well. Given the geographical reach, even the smallest of online businesses possess as a result of international shipping routes, card payments have skyrocketed over the past few years. In Scandinavian countries such as Sweden, cash transactions formed only 20% of all consumer payments in 2015.
Given that most millennials have reached adulthood by now, their spending capacity and purchasing power have increased. They possessed around 30% of gross income in 2015 and this figure is expected to grow up to 50% by 2025. Research has also shown that while older generations prefer to pay for minor purchases with cash, younger segments of the population are willing to use cards for transactions as minute as £5.
While many share deep misgivings about the safety of relying on card payments, physical cash has proved to be no safer. Unfortunately, banks are also susceptible to hacking and viruses, all of which compromise your money and data security. This is not to mention the number of other common physical threats including robberies and mugging. With credit/debit cards, the option of cancelling a lost or stolen card as well as OTP authentication renders it a far more secure mode of payment. It is also far safer for stores to accept card payments, making them less vulnerable to theft and violence – a common occurrence in many cities around the world.
Another compelling reason to turn to cashless payment is the convenience it affords. Instead of digging around your wallet for money, or struggling to find change, cards prevent this hassle and require minimal effort from both buyers and sellers. This prevents you from having to run to an ATM every time you are short on cash. It is also easier to store and does not experience the same wear and tear that notes would have to endure.
Credit/debit transactions also give you a detailed account of your expenditure for a month or year, allowing you to keep track of your expenses. This helps you make better financial decisions and enforce budgets, given that you know exactly where your money is going.
The emergence of mega industries such as Bitcoin and other forms of cryptocurrencies is further evidence that transactions are rapidly transforming into cashless, digitised processes. In fact, research indicates that even credit/debit cards are giving way to mobile payments, especially in countries such as China, where such payments dominate financial transactions.
Given that financial behaviour is now moving out of using cash, it is clear that businesses need to stay abreast of these developments if they are to stay relevant and remain competitive. While most businesses now accept cards and have moved on to using Point of Sale (POS) systems that allow for the processing of card payments, these perform the same functions as that of a cash register. Electronic Point of Sale (EPOS) systems, however, go one step further, allowing you to analyse data and identify trends through the transactions you process.
In addition to card payments, “tap and go” payments is another trend that is slowly starting to catch on in the UK market. Find out more about contact-less payments and it’s benefits here.
At eposEX, we are committed to not only ensure you stay up to date with changes in the market but also optimise your functions to meet the needs of the future. Contact us today and make the best decision for you and your business.