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. Though cash use was predicted to decline over the coming years, COVID-19 has catalysed an acceleration in this decline, due mainly 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.
Alongside the estimated 50% of consumers who no longer carry cash, the findings point towards a further significant shift in the use of contactless payment by the 50% of consumers who still do carry cash.
Seventy-six percent of the consumers said the coronavirus will affect their use of cash over the next six months; 75% said they are using less cash; 54% said they are avoiding using cash; and 44% said they will 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.
Although increasing the spending limit in itself may not be relevant to vending, it will foster a positive and lasting change in consumer behavior and attitudes that will ultimately accelerate the adoption of contactless payment to the extent that it will 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
In a recent Mastercard survey focused on the implications of the coronavirus pandemic, 82% of respondents worldwide now view contactless as the cleaner way to pay, and 74% state 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 that cash handling is dirty and may be another way the coronavirus can be transmitted and spread. The retail industry has accentuated this hysteria with many shops and supermarkets refusing to accept cash payments, offering card transactions only.
“I know a lot of merchants are putting signage up at the point of sale, ‘Please use contactless,'” said Linda Kirkpatrick, a Mastercard executive who works with banks and credit unions.
This change in consumer behavior and attitude towards cash, combined with concerted efforts by retailers and banks to drive consumers towards contactless payment, has major implications for vending in that vending machines with cash only payment will be increasingly unusable by the vast majority of the population.