A new report from payments company Square reveals a shift in business and consumer behaviour towards digital payments and a decline away from cash, greatly accelerated by safety measures put in place to cope with COVID-19.
Fewer than one in four payments are being made in cash - around half of pre-Covid levels - as businesses and consumers alike look for contact-free ways to pay.
The report also identified that in parallel with this trend of businesses moving away from accepting cash, consumers and businesses are increasingly using e-commerce and mobile payments. The percentage of remote payments taken by businesses using Square increased from 2% in January to 33% in April at the height of the pandemic. As businesses reopen, they continue to process an increased portion of payments over the phone or online without the need for physical contact, albeit not at the same levels seen at the peak of lockdown.
The new report has taken data from thousands of transactions across hundreds of small and medium sized businesses across the UK that used Square’s Point of Sale and payments technology, between January to July 2020. Square found that 31% of businesses made the move to being cashless by mid-July from just 8% at the start of 2020. This equates to an increase of 288%, a trend which shows little sign of abating.
The food and drink sector has led the way in going cashless - 33% of businesses in this sector were cashless, a massive increase from the start of the year when only 8% were cashless. Similar trends have been seen in other sectors including professional services (29% from 7%), retail (24% from 8%) and healthcare and fitness (29% from 15%).
Felipe Chacon, Economist at Square, said: “Covid has changed the way we pay. Existing trends towards digital and cashless payments and away from cash that have been underway for years have been greatly accelerated as a result of the pandemic. Business owners have had to move fast, quickly adapting to new ways of getting paid. They’ve had to balance keeping themselves and customers safe and feel safe, alongside making every sale they can.”
Whilst some businesses have made the move away from cash completely, others are keen to continue accepting notes and coins. Hugh Topping co-runs Topping & Company Booksellers, an independent family-run bookshop in Edinburgh and takes card payments with Square. He comments: “There are people who remain unbanked, vulnerable or simply just in favour of cash, so we will always accept both card and cash so everyone has access to reading literature.”
Sam Corban runs 400 Degrees, a cashless pizza van in Cambridgeshire, and is now taking payments online: “I've run cash free for the past two years. Now, I'm asking everyone to put their order in online even if they're standing in front of the trailer. Our customers have been fantastic”.