Anyone who has been in a shop in recent months will know that cash is no longer king. Cards, contactless or not, and payments by mobile phone or even smart watch have displaced coins and notes as the preferred mode of payment.
Payment solutions provider BOI Payment Acceptance was already at the centre of the shift in how Irish consumers spend, but the novel coronavirus pandemic has precipitated a veritable earthquake of change away from pockets full of loose change.
“We’ve seen three years of radical transformation in three months because of Covid,” said Brian Cleary, BOI Payment Acceptance’s managing director.
The changes are obvious at the till, but they go a lot deeper.
“We’ve seen mega growth in contactless, not just cards, but also devices, and, of course, a huge shift in terms of online shopping,” he said.
Sanitary concerns about handling cash explain some of the transformation, but nonetheless the numbers are dramatic.
“Our contactless levels [alone] are up 90 per cent on the same time last year,” said Cleary.
The technological changes that have allowed this transformation were already under way, but their adoption is not a simple question of ‘build it and they will come’. Beneath it lies the true teleology: people want the change.
“The changes in technology in payments is being driven by two things,” Cleary said. “One is what consumers are looking for and the other is what businesses are looking for.”
But what do they want? In both cases, they want seamlessness.
“The consumer wants to go into a retail space and be able to use a card. We did some research a few years ago and people said that if they didn’t see a ‘cards accepted’ sign they’d walk past.”
Ringing the changes
Businesses, meanwhile, want reliable technology and low costs.
“Obviously, there’s a cost for investing in this technology, supplying it and servicing it, and that’s our business – but we’re very transparent. We have no hidden charges,” said Cleary.
This has allowed even the smallest retailers to adopt new payment methods.
“Forty per cent of our business during the Covid period was people who were new to cards,” said Cleary.
Technologically, BOIPA’s payment systems are part of a large chain of digital events, but the whole idea is to get the technology out of the way of both the customer and the merchant.
“The things going on in the background – the data centre in Poland, Visa or Mastercard in France or the UK, then the bank – they’re not interested in them, they just want it to work,” he said.
“People probably think we’re owned by Visa or Mastercard.”
Alongside the technology, BOIPA also looks after regulatory issues such as the EU’s Strong Customer Authentication (SCA) components of the updated Payment Services (PSD2) directive.
“The main change in online commerce will be secure customer authentication. Essentially, we, as an industry, are making it much more secure for people buying online.”
The figures tell the story why.
“Our e-commerce is up 56 per cent year on year. You’ve got the large online places, we all know who they are, but you’ve now got businesses in Ireland starting to become e-commerce players,” said Cleary.
Retail stores have taken to the transformation like ducks to water, and the development of low-cost mobile points-of-sale (PoS) has helped small niche retailers get on board – even pop-up shops and markets.
Today, though, different kinds of businesses are accepting electronic payments, including professional and private service providers and even non-profit organisations. From solicitors to accountants, from taxis to private investigators, and even schools and clubs – anyone who wants to can now process payments electronically.
“You can [even] pay the legal fees for a house [purchase] by card,” said Cleary.
Cleary’s colleague, BOIPA marketing director Barry Gray, said that areas that were previously unable to handle cards, due to high costs, are being transformed.
“Where previously I was stuck and forced to use cash and cheques was in taxis and with schools. Taxis have changed completely now,” he said.
Schools, too, are served with specific school and club-centric specific payment systems; in BOIPA’s case through the acquisition of Way2Pay.
“The technology brings the money to the bank for a very small fee. They like that. Cash lodgements are crashing,” said Cleary.
And why not? Any retailer will tell you that the trip to the night safe was always a worry. Now it is on its way to being a relic of a bygone era.
In fact, it already is in some places.
In some countries, notably Sweden, cash is already close to useless in retail environments, such is the breadth of the adoption of card and contactless. In others, notably France and Germany, cards have been slower to take over – in Germany’s case, due to a longstanding suspicion of credit, and in France due to inflexible banking. Both are now changing, though, as debit cards proliferate and ‘neo-banks’ challenge the older institutions.
Ireland is somewhere in the middle. Cards, notably debit cards, are popular, but retailers and consumers did take time to adjust.
“The margins in Ireland, before we landed, were the fattest in Europe. We drove those down,” said Cleary.
The next step, he said, will involve work both at the back-end and the retail experience.
“The move from card to cloud is going very fast. We see a future where everything is digital: coins will disappear, there will be unattended devices and next generation ticketing where people use mobile phones,” he said.
What of cards themselves, though? Will smartphones and other connected devices send them the way of the dodo? Cleary said that while these methods of payment were growing, there is no sign of the death of the venerable plastic card.
“I don’t think in the near future you’ll see an end to cards, but you will see a swing toward people using their mobiles to pay.”
Cash, though? It may not be long for this world.
“We’re just about to commission a piece on research on how long cash will last. It could be three years, it could be five years,” he said.