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Cashless Society: Learning from Global Markets
WORLDPAY EDITORIAL TEAM
September 03, 2019
In the UK there is increasing awareness of the decline of cash transactions, but what can we learn from around the world?
Taken from our report with Retail Week in March, we explore where China, Canada and Sweden are in their journey towards a cashless society.
China are a mobile first country, where in 2017, according to research carried out by PwC, almost half of the world’s digital payments were made – fuelled by the two most popular payment services Alipay and WeChat Pay. According to one recent study, 98% of people with smartphones in urban areas use their devices for mobile payments Even homeless people are reported to accept donations via WeChat, using QR codes linked to payment accounts *. With the widespread use of smartphones, social media and the speed of growth in ecommerce this has fuelled the decline of cash purchases in the country.
As a result the central bank had to step in and announce that rejecting cash as a form of payment was illegal**, in an attempt protect to those not accustomed to electronic payments as more and more businesses in Beijing and Shanghai started to refuse cash payments. Despite being such a mobile centric country, China is only in sixth place in the ranking of the world’s most cashless societies.
Canada currently takes first place on the Forex Bonuses’ list of the world’s most cashless countries, largely because of its dependency on plastic – Canadians own more than two credit cards per person. Canadian banks and retailers have been strong drivers towards cashless payments in the country. By 2016, 40% of retailer point of sale devices were contactless-payment enabled, and more than 95% of credit cards in Canada supported contactless payments. For comparison, by October 2017 81% of UK debit cards were contactless, although that is up from 68% in 2017
The country is has also set a higher limit for contactless transactions with the ability for Canadians to pay for a wider range of goods and services than UK shoppers. The contactless payment limit in Canada is $100 – which at around £58, is almost double the UK’s current limit of £30.
Sweden is a nation which is rapidly moving towards becoming the world’s first completely cashless society. According to the central bank of Sweden, the proportion of cash transactions in retail dropped from 40% in 2010 to 13% in 2018, and around half of the country’s retailers predict they will stop accepting bills before 2025. Many consumers now pay for everyday goods using the country’s main payment app, Swish.
Swedish furniture giant Ikea recently began trialling a cash-free store in Valbo, after customer surveys revealed Ikea employees dedicate a higher amount of resources to handling cash than is comparable with the number of consumers who want to use cash to pay for their goods.
So what can retailers learn?
The shift to cash-free purchasing is driven by consumers’ desire for faster, frictionless shopping. But, with a multitude of technologies to choose from, UK retailers must ensure they’re implementing the right solution for their specific customer demographic.
Trialling cash-free solutions would allow businesses to test whether it has an impact on a number of different factors, from speed of sale to staff productivity. For example, some hospitality brands have trialled contactless ‘fast lanes’ which allow card payers to tap and go quickly in a card only queue, something that has been used to good effect at sporting events. Doing so will allow retailers to not only test the technology, but also see whether benefits such as increased productivity from store colleagues are apparent.