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The past year has been a turning point for the way we shop and spend money, as the UK moves closer to becoming a cashless society. With the spread of COVID-19 at the forefront of our minds throughout 2020, the country has seen a push for cashless spending from businesses and consumers alike.
Many retailers temporarily stopped accepting cash payments, resulting in a 35% decline in cash transactions. More than half of all payments in the UK were made using cards, while more than a quarter were contactless.
But what does the growth in cash-free payments over the last 12 months mean for your business? How can you adapt to a cashless Britain?
What does cashless Britain mean?
A cashless society in Britain means we no longer use physical banknotes and coins for our financial transactions. Instead, we would use other payment options such as:
- Card payments – debit or credit cards that primarily use chip and pin technology but can also be tapped.
- Contactless – you can use your card’s contactless feature to pay for goods up to a set limit – currently £45.
- Mobile wallet – mobile payments have no upper limit and include everything from Apple Pay to Google Pay. They can be found on most phones, smart watches, and more.
- Online payments – some small businesses can even implement an online checkout, so customers can pay in advance for events, appointments or a click and collect service.
UK Cashless Society? What do the stats say?
As a nation, we’re using our cards more and our cash less. In fact, cash accounted for just 17% of all payments in 2020, falling by 35% to 6.1 billion payments. Debit and credit card usage increased to 52% of all payments, while contactless increased from a 7% share in 2016 to 27% in 2020.
To support this shift to a cashless Britain, the UK government increased the contactless spending limit from £30 to £45 at the start of the pandemic. And it’s set to rise again in October 2021 to a limit of £100, securing contactless as a permanent and popular payment method. The number of people registered for mobile payments also increased by 75% in 2020 to more than 17 million people.
While the pandemic might have been a catalyst for this shift to a cashless Britain, it’s not the only reason cash is being replaced. Cash payments are slower at the till, harder to keep track of and if your wallet gets nicked, your cash is gone.
In fact, there’s been a long-term trend of cash use declining. In 2005, Brits used cash to pay for 64% of all purchases. In 2010, it decreased to 56%, then in 2015, it was down to 45%. Since then, the trend has continued, with the pandemic ensuring its decline.
How are businesses responding to a rise in cashless payments?
With the rise in cashless payments across Britain, businesses are having to quickly adapt their offering to meet their customers’ expectations.
According to Square’s recent study, more than 50% of UK businesses now accept online payments, while the share of cashless businesses has risen from 10% pre-COVID to 46% in March 2021. This means that nearly five in 10 Square businesses are cashless.
Businesses in the food and drink industry – such as restaurants, cafes and bars – have the highest percentage of cashless businesses at 46%, with retail following close behind at 40%.
Getting equipped for cashless payments
As a small business owner, if you don’t accept credit cards, you’re missing out on business. Before the pandemic, 52% of consumers believed businesses that didn’t accept credit cards would be left in the dust. And now, it’s more important than ever to offer cashless alternatives.
Square offers a range of cash-free technology to support your business, including:
- Square Reader – Easy to use and simple to set up, the Square Reader completes card payments in seconds. And it’s yours for just £19, plus VAT.
- Square Terminal – If you are looking for a more robust solution to accept cards, Square Terminal is an all-in-one card machine that prints receipts as well.
- Square Register –Go all out with the Square Register. This powerful till system is fully integrated with two screens – one for you, one for your customers.
All of our hardware can be paired with Square Point of Sale and our online reporting Dashboard. These tools contain powerful analytics and can help you manage your entire business. That’s every tool you need to accept cash-free payments and get paid faster.
Should you still accept cash payments?
While cash is on the decline, there is still a 10% share of people who use cash for all or most of their daily purchases. So, rather than do away with cash completely, you may want to keep your options open and continue to accept it.
As the UK heads towards a cashless future, now is the time to get your business ready and equipped. So, why not start investing in your cash-free payment options today? Square is here to help.
