Have contactless payments turned us into a cashless society?


A rattle of that piggy bank would let you know just how much money you had to spend and back then, all you could think of spending it on was probably sweets and comics.

Fast forward to the present day, and we’re still using our ‘loose change’ to buy sweets and comics (well, maybe we’ve progressed to newspapers at this stage). However, just like those printed newspapers have gradually become replaced by digital versions, so too has that loose change that may have rattled around in our pockets or piggy banks.

The relentless rise of contactless payments

Contactless payments have meant that many people go weeks without actually handling any cash at all. According to figures from UK Finance, in just one month in 2019, almost £7 billion was spent using cashless payments alone, that’s a staggering £220 million being splashed out a day using this method.

Consumers have been favouring contactless payments more and more in recent years, with their use steadily rising and pushing cash into second place when it comes to most people’s preferred method of payment.

In 2018, UK Finance reported that cash represented just 28% of all payments made in the UK that year, which was a fall of 16%. By contrast, the use of cashless payments soared with debit cards representing 40% of payments in 2018.

How contactless become a game-changer

While debit cards have been around for decades now, their more widespread use in recent years is down to the development of contactless technology, as well as the scrapping of fees from banks for using them.

For years, many smaller retailers would not accept debit card payments for values below £5 or £10, because the fees levied on them by banks meant that such transactions simply weren’t worth their while.

Now, those fees are gone and a debit card can be used to buy something as cheap as a bar of chocolate or a coffee.

So, while debit cards had previously been a convenient way to pay for higher-priced items, such as clothes and electronics in stores, the introduction of contactless technology has proved a real gamechanger and accelerated our race towards a cashless society.

Think of those things that you regularly need cash for – parking meters, vending machines, buying train tickets – and you’ll quickly realise that most of them now offer contactless payment options.

Therefore, because even the smallest of transactions can now be carried out without cash, it is not a bold claim to suggest that we may be moving towards a point when we no longer need cash.

Some countries are already further down the line than the UK in this regard. Sweden, for example, is one country that has embraced cashless payments and it is very common to see shops with signs indicating that they no longer accept cash as payment.

What are the advantages of a cashless society?

The fact that cashless payments have become so widespread shows that there are many advantages to this method.

For a start, people don’t have to carry large amounts of cash around with them, which is much less likely that it will be stolen or lost.

There is also a theory that using contactless payments is a much better way to budget than cash. Say you buy a cup of coffee that cost £2.50 and use your debit card or mobile payment app to pay for it. Just £2.50 will come out of your account. However, if you are using cash, you will have withdrawn £10 from an ATM, spent £2.50 on your coffee, and have the change burning a hole in your pocket, meaning it is more tempting to spend.

Using digital payment options also means that less cash is being produced. It costs money to make money, from printing notes to minting coins and then transporting them to banks around the country. With cashless payments, money can be moved around much quicker and at a fraction of the cost.

What are the downsides of a cashless society?

One of the main concerns about a cashless society is that it excludes people who don’t have access to technology. This includes many elderly people and those who live in rural areas. They, therefore, rely on being able to get access to cash, however, the upsurge in contactless payments has led to a reduction in the number of ATMs that are now available, and many of those which remain charge fees to use them.

There is also a counter-argument which suggests that contactless payments mean we end up spending more rather than less. It is suggested that the ease with which we pay for things using contactless payment methods mean that we don’t see the money going out as starkly as we see notes and coins disappearing from our wallets or purses.

Is a cashless society inevitable?

There remain many practical uses for cash these days, but with digital payment options increasing, more and more people of all ages and backgrounds look likely to opt for cash-free alternatives.

Apps like PayPal, Apple Pay, and Google Pay mean you don’t even need a debit card to make a contactless payment now.

One of the main stumbling blocks to a cashless society is the possibility that it may exclude certain sections of the population, in particular elderly people.

However, research carried out by UK Finance suggests that they too are adapting to contactless payments. According to UK Finance, 61% of over 65s made a contactless payment in 2018, which is a jump of 50% from the previous year.

There will come a time when many of that so-called ‘older generation’ will be made of people who have only ever known cash-free payments and that could be the time when we truly become a cashless society.