Can Cash Rescue the Costly Contactless Chaos?
04 November 2021
The end of October 2021 saw the spending limit on each use of a contactless card rise from £45 to £100. The rise has been introduced by the Financial Conduct Authority (FCA) and is fully backed by the UK Government after the apparent ‘success’ of the last rise from the previous £30 limit, introduced as the pandemic got into full swing in 2020. The last rise was welcomed by both consumers and retailers, especially as measures taken by some retailers during the lengthy lockdowns discouraged most customers from paying by cash. This latest rise however doesn’t seem quite so welcome from the viewpoint of both consumers and retailers.
While some consumers will no doubt be pleased by this change, reducing their time at the checkout, particularly over the upcoming busy festive season, others feel it is a step too far and poses a greater security risk to their bank accounts. Chancellor Rishi Sunak may view the move as a big boost to the high street following COVID-19 lockdowns, but many retailers are fearful this change will enhance the already massive problem they are experiencing with accidental non-payments via contactless.
Lost Revenue Thanks to ‘Missed’ Contactless Payments
We’ve all been to a self-serve till in a supermarket, pressed our contactless card against the machine, only to discover it has failed to read the chip, forcing us to present our contactless card a second time to make payment. But what seems a minor transaction blip to most of us is, in reality, costing supermarkets in particular billions in lost payments.
This is because many customers simply don’t realise the payment has failed and walk away with their shopping in all innocence, thinking their contactless payment has worked when it hasn’t. It’s becoming a big problem for many big businesses. While this new tech is undoubtedly clever and works efficiently most of the time, this issue suggests that contactless payments are not something many customers have fully got to grips with yet.
In addition to this, the main concern for consumers in relation to this limit increase is the news that up to £300 can be spent across several transactions on contactless cards before a pin number is required by the user. This could undoubtedly lead to a spike in card thefts and/or pickpocketing and bag snatches as opportunist thieves can quickly pay for £300 worth of goods on a stolen card before the victim has even realised their card has been stolen. According to financial website, thisismoney.co.uk, since contactless was introduced around 30% of those who have lost a debit card had money stolen via contactless, and the contactless limit increase could make that statistic even worse in the coming year.
A major charity has also warned that the rise in the contactless limit could increase the potential for fraud. Age UK has warned that older people in particular could be put off using bank cards to pay for goods and services as they fear the increase could lead to them accidentally overspending or being scared of falling victim to fraudsters that they already feel extremely vulnerable to.
Can Cash Combat These Issues?
With the UK’s contactless limit now being one of the highest across the globe, the mounting concerns the new £100 contactless limit brings with it, and supported by the findings in our recent Cash and Covid white paper, Volumatic is once again asking if it is now time for the UK to be meeting the overwhelming consumer demand for payment choice?
Cash payments have had something of a raw deal in all the furore over Covid and its damaging effects on the economy. Rumours that using cash aided the transmission of the virus were unjustly reported by the media, sparking customer concerns that cash was something of a super-spreader, and many retailers, wanting to do all they could to reassure customers that their stores were as safe as possible, made the decision to stop accepting cash as a payment instrument.
Cash however, is most definitely not the enemy – it plays a vital role in our society, particularly for older customers who don’t understand or trust card and mobile payments, and for those who work industries that pay them in cash and the myths around it spreading the virus are completely unfounded. In fact cash is no more dangerous than handling payment cards, your mobile phone or entering your pin number into card machines – the advice for any of these actions is to wash your hands or sanitise afterwards as a safety precaution against Covid, just as we’re recommended to do following many other actions in our day-to-day lives.
Cash After Covid
As experts in cash handling, Volumatic recently launched a White Paper on this very subject, which not only expelled the myths around using cash as a payment method in these uncertain times, but also highlighted the importance of its role across the globe as the world begins to recover from the unwelcome pandemic.
As many businesses begin to attract customers back to their establishments that they lost during lockdown, the need to offer customers a choice of payment is bigger than ever. 97% of consumers continue to carry cash on them when they go shopping, so it’s vitally important that retailers now bring an end to their ‘card payments only’ policy if they want to attract more customers back to their stores and recover their extensive losses from the past eighteen months of chaos.
Thankfully, businesses do seem to be getting the message as consumer spending begins to increase on the high street again, with 83% of retailers now stating they will always accept cash in their stores. But surely all businesses should be accepting cash again by now? Especially if it helps address the problems with contactless.
The Benefits of Cash Versus Contactless
Although the convenience of card and mobile payments, particularly via contactless is a big benefit in our busy lives, the losses experienced by stores because of contactless, alongside security worries from the general public surely mean we should give cash the opportunity to bounce back as a popular payment method once more?
As stated in Volumatic’s recent Cash and Covid white paper, 70% of consumers are expressing a desire to pay by cash in the future, meaning stores, garages, cinemas and food and drink establishments should all be welcoming cash with open arms.
Paying by cash leaves little room for error and missed payments at the till point – and while forgery concerns were once prevalent in accepting cash in the past – way before we’d ever heard of Covid – the introduction of the new polymer notes with multiple security features over recent years has helped reduce counterfeit production, meaning it’s less of a problem these days.
The Bank of England have also highlighted the continued importance of cash in society, citing the Financial Lives 2020 survey, The Impact of Coronavirus, which states that there are currently 1.2 million people in the UK who have limited access to banking services and 3.8 million in financial difficulty for whom cash can be an essential budgeting tool.
Cash Handling Solutions Are The Key
Volumatic are currently helping all kinds of businesses that handle large amounts of cash – including retail, banking and leisure establishments - to reduce worries over the handling, security and banking of cash by providing a range of products that not only reduce costs but also make every business more efficient.
Our CounterCache, CountEasy and fraud detection devices have transformed the landscape of cash counting and handling, with leading retailers like Morrisons, Wilko and, most recently, the Coop, taking advantage of these innovative solutions. Add to this the all-encompassing CounterCache intelligent (CCi) units, that means cash only gets touched once from the point of sale to the bank, and businesses really don’t have any excuses when it comes to safely accepting cash and efficiently processing it anymore, all thanks to Volumatic.
Making Cash King
There is no doubt that cash remains a viable and consistent payment method whatever changes come into being around card payments. And while contactless payments bring many benefits, only time will tell as to whether the £100 limit will be a success or whether it will indeed cause further headaches for stores.
Also, although the larger limit for contactless payments has already been introduced, many businesses across the UK simply aren’t yet geared up for this change, and it could take weeks or even months for them to make the necessary upgrades to their systems. With everyone trying to reduce costs in this post-pandemic period, making costly system changes to accommodate this change will happen, but it will take time – especially when it comes to smaller businesses.
Cash may seem old-school to some these days, but we shouldn’t be so quick to dismiss it in a world where alternative payment technology is becoming increasingly more sophisticated. With scams and fraudulent activity also becoming more sophisticated, we need to consider the ramifications of moving to a contactless only future. It’s important to remember too that cash has itself also become more high-tech, with the introduction of newer, more secure polymer notes over the past few years, making forgeries harder than ever before.
Ultimately, consumers should be given the choice they want and deserve to have when it comes to how they pay.
So while the UK adjusts to this latest change, and waits to see whether or not we encounter potential contactless chaos, the next time you nip out for a coffee or a lottery ticket, consider that change in your pocket and do struggling businesses a favour by making cash king once again.
View Volumatic’s range of cash handling, security and cash counting solutions here
Read Volumatic’s white paper on the future of cash after COVID and the impacts of cash on the high street.