Cash usage may be on the slide but notes and coins are still the UK's most commonly used buying tool, accounting for more than half of all payments last year, according to new figures.
When you see an old sock over a card terminal in London taxis, the first thought is not that it's something wrong with technology... ("Socked" cabbies who complain about Uber eating their lunch still don't get it...)
I am surprised the Government is not doing more to eradicate cash (in fact, they are doing quite the opposite, with new plastic banknotes and fancy coins). I am not proposing to ban cash payments, but - at the very least - fine those merchants who refuse
to accept cards. That might damage the socks industry, but that's another matter altogether.
Why fine those who don't take cards? Bit harsh!
Not everyone in this world is confident with the technology involved, my old tattooist chucked his card machine at the wall when he couldn't get it to work. Very good at tattoos, not so good at using technology.
The costs associated with cash over card is not perceived, whereas seeing a certain amount of money gone at each transaction is an issue.
Also why would a greengrocer who's average payment per transaction be £7.50 want a card machine when they will have to charge a minimum of £10. People who know their shops don't take card go to the cashpoint before hand.
Cash has a purpose and things will slowly change, and these merchants will find themselves changing too. Fining them will only make things worse.
I'd imagine cabbies are more reluctant to take cards because it is likely to impact their potential to make tips. Unless the mPOS providers had the foresight to add gratuity functionality in line with scheme requirements... I've actually discussed this
at length with a cabbie and the fees they have to front for terminal rental and per transaction charges - on top of their existing overheads - I can totally appreciate why they don't want to use them.
Minimum charge for card transactions is merchant's decision, it's not a must.
Whilst some people might find technology challenging, I am sure that tattooist does use a mobile phone (and doesn't chuck it at the wall when things go wrong).
There are no strong reasons for any merchant in 2014 not to accept cards. If, like taxi drivers, they refuse to accept cards flat out, the question then becomes why not?.. And the answers don't look convincing... IMHO.
Most of the "socked up" terminals in London were provided by VeriFone who PAID cab drivers to get the terminals installed (around £250...)
VeriFone charges passengers 10% (!) - another can of worms... - and there is an option to add a tip.
If it looks like fish and smells like fish, it's fish...
Paying for a cab by card would make like easier, after a night out or just can't be bothered to walk home from the station. As for paying for fruit and veg by card, the sums probably don't stack up half as well. Market traders too, some areas are mobile
blackspots (even in London) and prefer to transact in cash. Do they pay their taxes?! Now THAT IS another can of worms!
Exactly, Matt! I am still at a loss what VeriFone were thinking about. Especially considering how much Hailo et al are charging...
I believe you are missing the point re: Cabbie's, if my cab ride comes up to £9.50, it is easier to give the cabbie £10 and be on my way instead of passing him my card and go through all the processing. I believe that once we get mobile payments working
in a way that we can pay via our phones cash will also be easier. Outside of cabbies your local market day is another example that cash is king for most of the retailers at their tables, certainly booth sales are a cash business. I also agree that fining
people for not using cards is not the way to go, remember we do live in a democracy and I have a right to pay and accept payment anyway I wish. Only when a service is easy, convenient and safe will people change over.
Ever since I move to the UK I am an avid user of my payment card because of the lack or reduced fees than I was paying in Canada. Also the process is much easier and quicker here.
Alex...Old habits die hard. My parents were "just fine" with a phone and photos by post. Then I got them an iPad and showed how to use Skype and emails. They never looked back...Very Correct, my mom-in-law too, BUT, they don't have to pay 10% and have tips
Eradicating cash isn't in anybodys interest except for the payment industry. Instead of wishing you could fine these merchants how about treating them like customers. If they aren't using cards as much as you'd like the service is probably flawed or too
expensive. Work to improve it. If you're not convinced by what merchants are saying you're not listening hard enough.
"Why should regulation concern just the payment industry and not merchants?.."
Errrr .... are you suggesting that there are things in retail which aren't regulated or just referring to payments?
If the former I think you'd find there is, if the latter it's probably because there's more competition in retail and a duopoly doesn't exist.
If the Government of a given country abolishes cash tomorrow, there will be an outcry about "democracy", "freedom", etc. When the dust settles, we'll carry on with our lives as usual and things will be just fine (better, in fact). It's all our heads...
I am not suggesting we do that. I am, however, saying that the Government can (and should) do more to foster the right conditions for cash to become irrelevant in its own accord.
I think they are! It was clear that the Card Schemes were unable to regulate themselves and so the Government will need to do it for them.
If regulation brings down the cost of fees and new entrants can compete on a level playing field, then the longer term effect will be more (non cash) alternatives as retailers move to ditch the dirty currency in favour of the new (cheaper) alternatives.
In partnership with major banks, we are offering UK retailers in-store "zero Capex" interface for Paym. Cost-wise, it can only be improved if we start paying merchants for every transaction. The solution is cheaper, more convenient AND more powerful than
cash (as it bring loyalty, coupons and receipts into the same equation). Do we have the retailers queuing? Take a wild guess...
Did Paym happen because banks thought it was a cool idea? No...
Do children wake and demand to see a doctor for an injection? No...
Do mobile operators drop prices because they think their margins are unfair? No...
That's what regulations are for.
Alex, I understand that you are not suggesting this...
"If the Government of a given country abolishes cash tomorrow, there will be an outcry about "democracy", "freedom", etc. When the dust settles, we'll carry on with our lives as usual and things will be just fine (better, in fact). It's all our heads..."
But, I doubt that would happen. There would be unentended consequences. History shows that when money (currency, value exchange media) is denied, restricted or radically changed, economy uncertainity and even roits occur.
Retail is shaped by competition much more so than by regulation, the opposite of the payment/banking industry. This cultural gap leads to frustration. As a rule regulations (like Durbin) achieve little in the way of bringing down costs. Competition works
a lot better.
Card providers aren't going to reduce their fees much (or more generally lift their game) as a result of regulation. Only in response to competitive pressure. But why suffer the rigours of competition if you can instead get the government to help force
your unpopular offering onto the populace.
As the person who led the development of card acceptance in London's Black Taxis, I should like to point out that many cabbies are very comfortable with the technology. They are professionals and we often forget that. SOME drivers choose not to accept non-cash
payments and some do so because they are renting a taxi for the day and thus do not have the ability to swap thir account to the new taxi. Of course, there are those who choose not to accept cards and it is their choice not to. TfL do not mandate card accept
but have been supportive of the process to offer a multitude of payments. Cash is still the largest part of the indusrty but that is changing. Let's not forget, it wasn't that log ago that John Lewis didn't accept cards unless it was their old green card.
I hope we'll see more cards being accepted as the cost to serve continues to fall.
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© Finextra Research 2014