According to a recent report, cashless payments are now more popular in the UK than people using coins and notes.
The news comes in a report from the UK Payments Council, who have said that the number of payments made by consumers, businesses, and financial organizations made in cash dropped to 48% in 2014.
This is the first time that ‘non-cash’ payments have exceeded those made with cash, reflecting the steady trend to use automated payment methods and debit cards rather than pay by notes and coins. However, cash remains the most popular payment method by volume, followed by the debit card, which accounted for 24% of all payments last year.
Despite the shift, cash remains the most popular way to pay among consumers, who used it for more than half (52%) of all their transactions in 2014. The current forecast is that this figure will drop below 50% next year (2016), but there is no prediction for cash to disappear.
The Rise of Cashless Payments
The rise of cashless payments can be attributed to several factors, including the convenience and speed of transactions. With the advent of contactless payments, consumers can now make purchases with just a tap of their card or even their smartphone. This technology has been widely adopted in the UK, with many retailers and service providers offering contactless payment options.
Moreover, the growth of online shopping has also contributed to the increase in cashless payments. Consumers are increasingly turning to e-commerce platforms for their shopping needs, where digital payment methods are the norm. Services like PayPal, Apple Pay, and Google Wallet have made it easier for consumers to make secure transactions online without the need for physical cash.
Impact on Businesses and Financial Institutions
For businesses, the shift towards cashless payments has brought about several benefits. It reduces the need for handling and securing large amounts of cash, which can be both time-consuming and risky. Additionally, cashless transactions can be processed more quickly, improving the efficiency of sales operations and customer service.
Financial institutions have also played a significant role in promoting cashless payments. Banks and credit card companies have introduced various incentives to encourage the use of debit and credit cards. These include cashback offers, reward points, and lower transaction fees for merchants. As a result, both consumers and businesses are more inclined to opt for cashless payment methods.
Despite the growing popularity of cashless payments, it is important to note that cash still holds a significant place in the economy. Many people, particularly older generations and those in rural areas, continue to rely on cash for their daily transactions. Additionally, cash is often preferred for small purchases and in situations where electronic payment options are not available.
Consumers still prefer cash over cashless payments, as in 2014 52% of all payments made by consumers were made in cash, this is expected to drop in 2015. However, the trend indicates a gradual shift towards a more cashless society, driven by technological advancements and changing consumer preferences.
In conclusion, while cashless payments have overtaken cash in terms of the number of transactions, cash remains an essential part of the payment landscape. The future will likely see a continued decline in cash usage, but it is unlikely to disappear entirely. The balance between cash and cashless payments will depend on various factors, including technological developments, consumer behavior, and the efforts of businesses and financial institutions to promote digital payment methods.
Source Ubergizmo
Image Credit: Flickr
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