The numbers are in: COVID-19 has pushed consumers away from cash in the vending market
Consumers are fearful due to concerns that cash handling is dirty and may be another way the coronavirus can be transmitted and spread. The retail industry and vending market has accentuated this hysteria with many shops and supermarkets refusing to accept cash payments, offering card transactions only.
Cash has long been king in the vending market. However, with innovation in contactless payment technology and corresponding growth in consumer adoption, momentum has steadily grown towards a time in the near future when the majority of vending machines only take contactless payment.
That was in a world before COVID-19, a global crisis the likes of which few of us have experienced and none will ever wish to experience again. Cash use was predicted to decline over the coming years. COVID-19, however, has catalyzed an acceleration in this decline. This is mainly due to findings by scientists that “infected” cash was causing human-to-human transmission of the disease.
Research confirms the trend in the vending market
LINK ATM, a U.K. based ATM operator, has undertaken weekly consumer research with YouGov, a U.K. based market research and data analytics firm, since early March 2020 to understand how shopping habits and cash payment has changed during the COVID-19 pandemic. The conclusions are stark for retail and hospitality services where there is still a dependency on cash payment.
Approximately 50% of consumers no longer carry cash. The findings indicate a significant shift in contactless payment use. This shift includes the remaining 50% of consumers who still carry cash.
Seventy-six percent of consumers expect the coronavirus to impact their cash use in the next six months. Additionally, 75% are currently using less cash, and 54% actively avoid it. Furthermore, 44% express their intention to use contactless and mobile payments more.
The U.K. authorities also played their part by increasing the contactless payment limit from £30 ($41.11) to £45 ($61.67) on April 1, 2020, thus encouraging consumers to opt for contactless transactions rather than handing over cash.
“The payments industry has been working closely with retailers to be able to increase the contactless payment limit to help customers with their shopping at this critical time for the country,” said Stephen Jones, chief executive of UK Finance, a trade association for the U.K. banking and financial services sector.
“This will give more people the choice to opt for the speed and convenience of purchasing goods using their contactless card, helping to cut queues at the checkout,” he said.
Increasing the spending limit may not be directly relevant to vending. However, it fosters a positive change in consumer behavior and attitudes. This change will ultimately accelerate the adoption of contactless payment. It is expected to become the de-facto payment method for all transactions. Hard cash in its current form will simply be unable to survive this fundamental shift in consumer behavior.
A global trend
82% worldwide view contactless payment as cleaner. A Mastercard survey highlights changing perceptions in payment hygiene. Additionally, 74% state that they will continue to use contactless payment post-pandemic. Some even avoided withdrawing or handling potentially dirty cash altogether, with ATM transactions down by over 60% since lockdowns began.
Today, consumers are fearful due to concerns about the cleanliness of cash handling. They worry that it may be another way the coronavirus can be transmitted and spread. The retail industry has accentuated this hysteria. Many shops and supermarkets now refuse to accept cash payments, offering card transactions only.
Linda Kirkpatrick, a Mastercard executive working with banks and credit unions, said, “I know a lot of merchants are putting up signage at the point of sale.” She encourages customers to use contactless payment.
This change in consumer behavior and attitude towards cash has major implications for vending. Additionally, concerted efforts by retailers and banks aim to drive consumers towards contactless payment. As a result, vending machines that accept only cash will be increasingly unusable by the vast majority of the population.