Cash may be king, but card and contactless are threatening to usurp the throne.
The evidence is there in the numbers: speaking in June, Fabio Panetta, a member of the executive board of the European Central Bank (ECB), noted that the volume of cash being lodged at central banks and commercial banks has fallen by around 20-25 per cent in the eurozone since early 2020. Meanwhile, the ECB’s 2020 ‘Space’ study into attitudes toward cash in the eurozone found 40 per cent of respondents were using cash less frequently than before.
Even Germany, noted for its attachment to cash and aversion to credit, has seen a shift, with broadcaster Deutsche Welle noting that in 2020 shops made almost 56 per cent of sales via contactless payments.
The same can be seen on the ground, including in Ireland, said Garrett Clifford, general manager Ireland at Worldpay from FIS.
“I’ve actually seen food outlets, quick service food in particular, and certain retailers with signs saying, ‘cash not accepted, card only’,” he said.
The trend among consumers has been toward less cash use and alternative payment methods. Naturally, sanitary concerns in the wake of the Covid-19 pandemic have driven the shift, or at least accelerated it, but widespread adoption of new technology and the desire for convenience are also key for consumers.
“They’re paying with their watches and with their phones. Definitely Covid has had an impact, and it has been here long enough for the habit to become the norm,” he said.
Ireland is in the middle of the pack when it comes to embracing digital payments: ahead of the US but with some way to go in comparison to its EU peers.
“Sweden, for example, has really embraced payment technology. That said, we have a love of new technology and we’re associated with a lot of big technology companies like Apple, Facebook and Google. That does have an effect, as people have tech skills,” Clifford said. “As consumers, we’re definitely pushing away from cash.”
For retailers, the benefits are different but no less compelling: security and easier accounting, for example, but payments data is also a treasure trove of business intelligence.
Now part of Fidelity National Information Services (FIS), as a payment processor Worldpay is in a position to provide its clients with useful information that can help to make decisions both in-store and about the future of businesses.
Before that, though, retailers want to know that payments will be seamless and won’t break the bank.
“They want speed, they want convenience and they want the data behind it,” Clifford said.
The move toward data reflects an awareness not only of business benefits but also of the increased abilities of analytics platforms, and their ease of use.
“Data is becoming more and more key to business success and those who use it are well ahead of the competition. It can help with things like planning staff rotation and understanding sales volume; efficiency of business in effect.”
Using payments data on Worldpay from FIS platform, retailers can not only look back at the past but also make reasonable predictions of the future.
“Machine learning has been around for a while. Given time, it starts to be able to predict things – and that’s where it becomes really interesting: it can be either the short-or-medium-term future, but it’s about driving efficiency and maximising profit,” Clifford said.
“Retailers are asking themselves how they are going to grow. How are they going to make the right decisions? The datasets we provide give a lot of information to help businesses of all sizes make really key decisions, such as should they be growing online; should they expand their in-store offering.”
It is also done in a GDPR-compliant fashion, giving retailers detailed information on trends, including how far customers may have travelled, without identifying individuals.
“We can look at age groups and demographics, where people are travelling from . . . it’s more than payments data, it’s about trends.”
One clearly discernible trend is the growth of e-commerce, but Clifford said that, in fact, e-commerce and in-store sales were showing signs of merging.
“The line between online and in-store is becoming more and more blurred. Buying online and returning in-store is more common, for instance.”
This kind of customer demand requires system integration, though, as shops running two unconsolidated systems, one for in-store and one for online, soon run into roadblocks.
“Buying online and returning online is time consuming, whereas returning in-store is an easy thing to do. However, to manage that you have to have the right solution in place, and you need consolidation on the payments channel. Then you get that true omni-channel experience.”
Worldpay from FIS is now partnering with Permanent TSB to increase its visibility with consumers, though it remains a B2B business. Clifford said this was to support retailers by growing public confidence.
“Confidence is really important for consumers, and it will drive more sales through retailers.”
What is already clear is that payments have become an integral part of all retailers’ lives. Clifford said the data that came with it would be transformational. “The small retailers of today are the big retailers of tomorrow.”