Contactless commerce: the rapid decline of cash

Covid-19 has had a big impact on the payments industry, leading to huge growth of contactless and online payments technology

Businesses have only really survived the pandemic because of the opportunities they have to take payments online. Picture: Getty

It really has never been easier to take payments online. We are blessed to have a smorgasbord of online payment providers which can be easily added to any website to give businesses an e-commerce revenue stream.

Will cash finally become a thing of the past? Covid-19 has escalated a cashless society as more and more businesses offer cashless payment options.

“Covid-19 has had a significant impact on the payments industry. With consumers now less likely to use cash because of the pandemic, contactless payments have skyrocketed,” said Garrett Clifford, general manager of Worldpay Ireland.

“Recent research conducted by Worldpay from FIS shows cash usage dropped globally by 10 per cent in 2020 to 20 per cent.”

In Ireland, there was a 26.6 per cent increase in the volume of contactless transactions after the limit increase from €30 to €50 was implemented in March 2020 to encourage more contactless payments and help curb the spread of Covid.

Consumer payment habits are changing – and so are attitudes towards contactless payments. The use of mobile technology and the introduction of 5G have both proved key factors in the move towards cashless payments.

“E-commerce has proved to be a lifeline for lots of businesses during the pandemic, allowing them to continue trading when their stores have been closed,” said Clifford.

“Businesses have seen they can now interact with their customers in a new way – and this growth looks set to continue, with the global e-commerce market now set to grow by 12 per cent annually to be worth US$7,330 billion by 2024.”

Aren’t we lucky to be in this new digital age when something like this happens to the world? Businesses have only really survived because of the opportunities they now have to take payments online.

“When we first started out about 20-odd years ago, taking payments online was messy, it was hard and it was complicated. The banks didn’t know what it really was. They had difficulty dealing with online [payments],” said Michele Neylon, chief executive of Blacknight.

“For a business starting out selling online, you didn’t have many options and most of them weren’t particularly good. There were a lot of barriers in the way, essentially. Nowadays it’s very, very easy to get set up. Whether you’re selling physical goods or services, or a combination of both, there are plenty of options available to you.”

PayPal is a common easy payment system to use, and Stripe is another which is popular and simple to set up. Most of the banks offer e-commerce-enabled options as well.

“You can get a basic online shop up and running within a couple of hours and you don’t have to spend thousands of euro to do it. Companies such as ourselves offer a range of different solutions to people starting from basically free and upwards,” said Neylon.

“It’s all down to how much time and energy you want to put into it, and your own skill set.”

Neylon warned that companies in the food industry can lose out on profits if they are not prepared to invest in their own e-commerce site.

Garrett Clifford, general manager of Worldpay Ireland: ‘With consumers now less likely to use cash because of the pandemic, contactless payments have skyrocketed’

“The big attraction, I suppose, for the food service companies is signing up with JustEat or one of the other ones – but while that’s fast and easy in many respects, it can be very costly,” said Neylon.

“Being able to actually do it themselves will save a lot of money, and that will help them to bring in more money in the long run.”

Irish start-up Flipdish is helping companies in this space with their food delivery platform, which can be added to the customer’s existing website – or Flipdish can create a new online ordering website for them.

“The swing to online sales has been gigantic, it’s seismic. A lot of businesses which were probably trying to avoid selling online were forced to in order to survive,” said Neylon.

“We have a client who started making a couple of cloth masks for friends and family and realised that there was actually a demand for this. The next thing you know, they’re now selling them online – hundreds of these things every week.”

The need to change has made companies recognise the benefits of change, according to Neylon.

“Companies that were previously wholesaling directly into restaurants, into hotels and into bars – well that all went away, so they ended up pivoting to selling directly to the public. That’s been kind of fascinating.”

For businesses like these that have tasted the direct payments of selling online might be a little hesitant when they make a return to their original markets. Wholesaling is where credit lines exist, and the chance to be stung out while waiting on a payment to arrive.

Neylon also warned small businesses to make sure that, if they are using a payment system, to go with a reputable company which has secure payments to the forefront of their agenda. SMEs should also check out the business credentials of any third-party sites they are looking to sell their wares on to.

“It’s the small businesses like the little corner shop or the butcher or the micro businesses starting out, they don’t have the resources,” said Neylon.

“A lot of them see the internet and technology as being this great big mystery, but they know they need to do something with it and they’re the ones who, unfortunately, get duped.”

It can be as simple as asking a few questions and checking the reviews of providers on third-party sites to ensure the provider is reliable.

Fraud prevention has been high on the list of priorities among Worldpay customers moving to e-commerce platforms. Ease of use for all parties involved is what businesses now demand when looking for a provider.

“Our customers are demanding solutions which focus on fraud prevention. As many businesses take their first steps into the e-commerce market, they want to protect their revenue and stop fraud before it happens, and our solutions are providing them with the confidence to do this,” said Clifford.

“We have also seen that customers are looking for a single-service provider, as they are looking for a frictionless and simple payment experience for both themselves and their customers by processing payments quickly and efficiently. There is also high demand for growth programs as businesses look to provide a greater reach to their customers.”

One of the main concerns businesses have when adopting to new technologies is that their staff are not going to be capable of adapting to the new methods. It’s important there is a level of training given by the technology providers to ensure a smooth move to a new system.

“Both e-commerce and contactless technology have come on in leaps and bounds in terms of usability for staff and consumers. Payment technology is becoming seamless and more and more people are now able to use it, but despite this some can still feel excluded from new technologies,” said Clifford.

“As a result, Worldpay from FIS offers training to our customers which is aimed at keeping them regularly updated on new processes.”

When it comes to online payments, linking your payments up to an online accounts system like Big Red Cloud can make your life, and that of your accountants, easier in the long run.

“In the last 12 months we’ve seen our profits grow by just under 30 per cent because of digital adoption. We were well placed to be in the cloud at the right time, given the circumstances that have prevailed for everybody,” said Marc O’Dwyer, chief executive of Big Red Cloud.

“In terms of the banking and the payments, you have a link with Plaid so we can import all the bank transactions through the Plaid link from any of the pillar banks in Ireland – and that includes Revolut – so that significantly reduces the time and effort for a small business owner to produce their account.”

The most common demand customers have of the accounts software company, according to O’Dwyer, is gaining remote access for multiple staff members within their organisations.

“You get that with our Big Red Cloud cloud accounts, that was our biggest issue. Owners wanted to make sure that certain staff members only saw certain areas of the account; they wanted the ability to have a user-defined login,” he said.

“They are also looking for more automation, getting access to purchase invoices and getting them in the system. We now have a purchase invoice importer, so now the supplier can just email it to a dedicated email within the business.”

Its system saves the business owner a lot of hassle as, once the purchase invoice has been checked off and is in the Big Red Cloud system, it increases efficiency and speed – and of course saves the need for manual invoices.

One new addition Big Red Cloud will be complementing its online invoices with is an easier and more secure way for companies to pay the vendor.

“Making that process a whole lot easier for the small business owner by embedding payment links in the invoices that they send their customers, so the customer could just click on that link and pay. There’s no more credit control or having to chase debtors, it’s all automated,” said O’Dwyer.

“The customer will click on that link and pay, and that would automatically be part of the accounting system so that will automatically reconcile in the customer’s account within your accounting system and with your bank in your accounting system.”

This new process will remove the mundane tasks done by the bookkeeper of a small business, and O’Dwyer said it’s set to redefine the role an accountant plays within a small business.

“An accountant will need to re-educate themselves more as advisers, helping businesses, as opposed to doing the day-to-day grunt work that they would have done up until now,” he said.

“It’s an end-to-end process for the business owner within the accounts, and literally the only thing the accountant will be doing at the end of the month will be reviewing the accounts and giving them advice – for example, streamlining a restaurant’s menu because they can see a lot of food wastage. It will be more business advice the accountant will be giving.”

What else can we expect to see happening in the contactless payments area? Worldpay suggests there will be an even stronger move towards mobile payments.

“Throughout 2021 we can expect to see mobile payments continue to grow, whether that’s at the point of sale (POS) or online. Recent research from Worldpay from FIS found that in 2020, debit cards were the preferred method for paying online and at the POS in Ireland,” said Clifford

“That will change, as by 2024, 47 per cent of sales will come from mobile commerce, and globally digital wallets are forecast to become the most popular online payment method by 2024.”