Going Cashless and Cardless in an Ageing Population

The technological developments that have been made in the Fintech sector over the last decade have enabled the market to on in leaps and bounds from where they used to be. Technology has helped us reduce queue times, speed up payments and make them more secure than ever. Introducing the possibility of a cashless population

In fact, it is predicted that by 2018, cash will make up less than 50% of all transactions globally[1]. There has been a four-fold increase in card usage at point of sale over the last decade. Contactless payments have seen explosive growth over the last 18 months. 10% of all transactions made in the UK are now being made using contactless technology.[2] Whilst mobile payments are still in their infancy, research from Gartner predicts that mobile payment adoption rates will average a 35% growth rate, until 2017.

As we progress toward an ever more technology-lead society, are we at risk of leaving some of our most vulnerable people in society behind?

We live in an ageing population. In fact, one in five of the UK population is over State Pension age. Globally, the number of older people is increasing at a faster rate than the general population. One in nine people in the world are aged 60 years or over and this figure is set to increase to one in five by 2050[3].

Our ageing population is likely to have an impact on our future development and growth. It could slow the rate at which we adopt new payment technologies such as cashless, cardless and even pinless.

As we slowly reduce the number of traditional payment methods available, we are at risk of alienating a generation of consumers who potentially have more disposable income than the millennials who are more likely to adopt this new technology.

‘Baby boomers’ (People who were born post World War II between the years of 1946 and 1964) are less likely to own a smartphone. In fact, only one in five 65-74 year olds do, so this would make the adoption of mobile payments for older customers much lower.

Some European and Scandinavian countries are already looking to reduce the amount of cash in circulation, with Sweden being the most cash-free society in the world. Less than 6% of all transactions carried out in Sweden are now made in cash, with the rest relying on card or mobile pay.

On December 4 2011, the Italian Prime Minister, Mario Monti, made cash transactions over €1,000 illegal. In September 2015, France made cash transactions over €1,000 illegal, down from the previous limit of €3,000.[4] While there is no evidence yet that the UK will follow its European counterparts just yet, we could see this change in the next five years.

May 2015 was the turning point for our spending habits in the UK and, for the first time, more transactions were made by electronic payment than cash. We have already seen London buses become cashless and it is likely that over the coming months and years we will see more public services opting to go cashless.

What can we do to help the baby boomers?

Access – One of the biggest barriers to using new technology is access and the ability to use online and mobile payment applications. In the UK, 45% of 55-75 year-olds are reported to spend up to 30 hours per week online and 25% are considered “heavy users” (spending more than 30 hours a week). However there are still currently, 6 million older people who have never used the internet.[5]

Education – This is going to be the most important thing to help them adopt new payment technology. More banks and acquirers need to focus their efforts on giving practical advice and help on how to use it.

Remove Barriers – It is important for the payments industry to understand the problems that sections of society face on a day to day basis when it comes to making payments. For example, the design of PIN pads and ATMs can make them difficult to use for people with arthritis or sight impairments.

It is not ubiquitous – Many banks are not issuing contactless cards as standard. Should this become a mandatory requirement, to encourage people to use this technology?

Summary

It has been rumoured that cheques will be abolished in the UK by 2018, which will mean for many people, having their hand forced in having to adopt new payment methods, cashless methods. In fact, research conducted by Age UK shows that cheques are particularly important to older people, with 73% of them using them as a means of payment[6]. Meanwhile, 63% of cheque users of all ages agree that they would find it a problem if they were no longer available.

There is no doubt that the world of payments has entered an era of extreme transformation, however, it is evident that there is a lack of understanding of the needs of an ageing population. This isn’t limited to the payments and Fintech sectors, as technological advancements are being made across various sectors. More time needs to be spent understanding their needs and developing solutions that will help with their day to day lives, without being difficult to access.

Although it is likely that one way or another we are likely to have less cash in our pockets over the coming years, it is important for businesses to undertake more focus group exercises before bringing a solution to market to understand the needs of minority groups. This will ensure that the voice of every customer is heard and that we all advance forward together.

[1] Source: The Treasurer https://www.treasurers.org/future-cash

[2] Source: Talking Payments https://www.talkingpayments.com/news/1008/1-in-10-uk-transactions-are-now-contactless

[3] Source: United Nations Population Fund Report http://www.unfpa.org/sites/default/files/pub-pdf/Ageing%20report.pdf

[4] Source: Reuters http://www.reuters.com/article/us-france-security-financing-idUSKBN0ME14720150318

[5] Source: Internet Access 2010 Households and Individuals, ONS, 2010

[6] Source: http://www.ageuk.org.uk/latest-press/archive/73-percent-of-older-people-still-using-cheques/

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