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Future of Payments 2020

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The pandemic has already made tan- gible changes in cashless behaviours, as evidenced by retailers and payments pro- viders increasing the contactless limit on April 1 to £45. The last contactless limit increase to £30 took two years to imple- ment, but this rise was rolled out in a mat- ter of weeks. For consumers, the value proposition of a cashless UK is clear: convenience. "Car- rying cash is just no longer convenient," says Laura McCracken, global executive vice president at Wirecard. "In the near future, f lexibility around payment along the customer experience will explode." McCracken sees a future in which tech- nology will emerge that lets customers pay in the changing room or automati- cally as they leave the shop. "Integration of ecommerce and physical retail spaces will make payments a frictionless and even invisible part of the shopping expe- rience," she says. Some of the loudest champions of cash- less societies are cryptocurrency play- ers. Charles Hoskinson, co-founder of Ethereum and chief executive of block- chain giant IOHK, hopes COVID-19 will result in a permanent move towards a cashless society. "The pandemic and associated lock- down will drive a revival of interest in the decentralisation and democratisation of financial transactions through 'chal- lenger banks' and technologies such as big data and blockchain," says Hoskinson. Kickstarting the cashless revolution The nationwide lockdown, which has sparked a surge in online shopping and cut cash machine usage by half, could accelerate the UK's shift towards a cashless society hen the UK government announced closure of non-essen- tial retailers on March 13, chef Ed McIlroy had to work out how to keep his business, a burger bar in a north London pub, going. Like many food outlets, Four Legs became a cashless, delivery-only business overnight. "I didn't want my delivery staff han- dling cash," says McIlroy. "It didn't feel safe." Instead, he implemented an ana- logue cashless payments system. Custom- ers who want delivery place their orders through a Google Form and then pay their bill via bank transfer. While rudimentary, the cashless system has enabled Four Legs to continue operating through the crisis. It has also shown McIlroy the potential for permanently shifting to a cashless model. "It's been a dream for us," he says. "Before this happened, we weren't in con - trol of the money coming in because we were using the pub's point of sale. It's never ideal for there to be a middleman between the customer and your money." Prior to the pandemic, the UK was ten- tatively edging towards becoming a cash- less society, with one in six millennials living a cashless life. While in lockdown, cash usage across the country has halved, according to LINK, the UK's largest ATM operator. A rise in online shopping and increased use of contactless payments, amid fears of the virus spreading via coins and banknotes, all contributed to the fall in cash transactions. It raises the question: will this step- change in both consumer and retailer behaviour be the tipping point that pushes the UK into becoming a cashless society? "The current crisis has accelerated the shift towards cashless payments among small community-based businesses," says Lu Zurawski, retail payments lead at payments systems company ACI Worldwide. "Once the crisis has passed, going cashless will not only become the norm for many small businesses, but also pave the way for the adoption of new, innovative payments services to capitalise on the shift away from cash." Oliver Balch Journalist specialising in sustainability, business and travel, and author of travelogues on South America, India and Wales. He sees digital payments as the only way of ensuring remote access to services that can withstand any disruption to tradi- tional banking systems. "The lockdown will continue the drive towards a 'new normal' based around the decentralisation, democ- ratisation and digitalisation of finance so people no longer depend on a financial mid- dleman for their services," he says. Proponents of cashless societies often look to Sweden as evidence of what's pos- sible. Sweden is one of the countries in which its citizens use the least amount of cash in the world. According to research from the Swedish Central Bank, only 1 per cent of Sweden's GDP was circulating in cash in 2018 compared to 4 per cent in the UK and 3 per cent in the Eurozone. While businesses and consumers alike herald Sweden's shift towards cash - less payments as a more secure and con- venient way to pay, it has also sparked a national debate about what happens to those who can't, or don't want to, go mobile. The same questions are now being raised here in the UK. "It is now more important than ever to ensure no one is left behind," says Jeni Mundy, UK and Ireland managing direc- tor at Visa. There are currently 1.5 million unbanked citizens in the UK, who by defi- nition are completely dependent on cash. But Hoskinson believes the worry is overplayed as groups such as the elderly and unbanked can also see the benefits of a cashless society. "New fintech innova- tions such as app-based challenger banks and blockchain technologies can give peo- ple far greater ownership over their own identities and assets without depending on large financial institutions," he says. "The poor performance of many large institutions during the current pandemic is creating a consumer culture more con- ducive to decentralisation." Other experts say the gains in contact- less payments technologies should not come at the exclusion of improving access to cash for those who continue to need it. Earlier this year, Visa launched a scheme with its partner banks to incentivise retailers to offer cashback to consumers using their Visa debit cards in areas where access to cash is limited. "For some, cash remains the only option and as availabil - ity of cash reduces, we need to find ways to avoid excluding these individuals from the financial system," says Visa's Mundy. McIlory sees this in his own business, which pre-COVID-19 operated out of a pub, where he says he wouldn't have made the call to go entirely cashless because a per- centage of his customers still expect to be able to pay with cash. But now the situation looks different. "The plan was to grow into our own premises," he says. "If that still happens, then we'll also go cashless." Distributed in Publishing manager Alexion Lai Deputy editor Francesca Cassidy Head of production Justyna O'Connell Design Sara Gelfgren Kellie Jerrard Harry Lewis-Irlam Celina Lucey Colm McDermott Samuele Motta Jack Woolrich Managing editor Benjamin Chiou Associate editor Peter Archer Published in association with Although this publication is funded through advertising and sponsorship, all editorial is without bias and sponsored features are clearly labelled. For an upcoming schedule, partnership inquiries or feedback, please call +44 (0)20 8616 7400 or e-mail info@raconteur.net. Raconteur is a leading publisher of special-interest content and research. Its pub- lications and articles cover a wide range of topics, including business, finance, sustainability, healthcare, lifestyle and technology. Raconteur special reports are published exclu- sively in The Times and The Sunday Times as well as online at raconteur.net. The information contained in this publication has been obtained from sources the Proprietors believe to be correct. However, no legal liability can be accepted for any errors. No part of this publication may be reproduced with- out the prior consent of the Publisher. © Raconteur Media /future-payments-2020 @raconteur /raconteur.net @raconteur_london FUTURE OF PAYMENTS I N F O G R A P H I C B A S I C I N C O M E S E X Y P A Y M E N T S Digital payments are thriving, but cash usage is actually on the rise in some economies Why the argument for a universal basic income has begun to gather speed When products are deemed controversial, finding a payments provider can get a little tricky 03 07 08 raconteur.net Anna Codrea-Rado W Contributors Access to Cash Review 2019 LINK 2020 55% 67% 35% of UK consumers say they like to pay for small things with cash say they use cash for peace of mind say they like to have the option of how to pay CASH USAGE ON THE DECLINE ATM transaction volumes across the LINK network (millions) TOP RE ASONS WHY CONSUMERS S TILL USE CASH Lockdown will continue the drive towards a 'new normal' based around the decentralisation, democratisation and digitalisation of finance so people no longer depend on a financial middleman I N D E P E N D E N T P U B L I C A T I O N B Y 1 0 / 0 5 / 2 0 2 0 # 0 6 6 3 R A C O N T E U R . N E T C A S H Art director Joanna Bird Digital content executive Taryn Brickner Design director Tim Whitlock 200 250 150 2018 2019 2020 Cash usage had already started to drop significantly towards the end of 2019 Anna Codrea-Rado Culture and technology journalist, with work published in The New York Times, The Guardian and WIRED. Katie Deighton Business reporter based in New York, writing about the media and advertising industries as senior reporter for The Drum. Ben Edwards Journalist and copy writer, specialising in finance, business, legal ser vices and technolog y. Marina Gerner Award-winning arts, philosophy and finance writer, contributing to The Economist's 1843, The Times Literar y Supplement and Standpoint. Emily Hill Journalist and author, formerly working as commissioning editor at The Spectator and feature writer for The Mail on Sunday. Joe McGrath Financial journalist and editorial director of Rhotic Media, with work published in Bloomberg, Financial Times, Dow Jones and Financial News. Oliver Pickup Award-winning journalist, he specialises in technolog y, business and sport, and contributes to a wide range of publications.

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