HCR Law Events

12 June 2020

The demise of cash? How will our changing shopping and spending habits change our world?

Changing consumer habits, including the ever-increasing use of online shopping, have been a factor in both the declining use of cash and increasing use of card payments – when was the last time you actually walked into a bank or paid for something with cash?

In the emerging world of technology adoption such as Amazon Go with cashier-less stores you can literally walk out of without queuing, bagging or paying at a till and Prime Now, where Amazon deliver your Morrisons shopping the same day for free with all orders over £30, our shopping habits are changing very rapidly.

The partnership between Morrisons and Amazon, Prime Now, is smart, and it will go some way to helping Morrisons gain market share in the online shopping arena. The Lidl/Buymie partnership and the Aldi food parcels initiative show that discount retailers are also testing the waters in terms of online food shopping and they aren’t relying upon consumer footfall to maintain and to gain market share. These developments threaten the larger food retailers who have dominated the home food delivery market for some time.

At the same time, even before the Covid-19 pandemic, the move away from cash has been increasing. In 2019, more than half of all payments in the UK were made by card as cash usage fell sharply.

When we look at the impact of the shift from the use of cash to contactless payments, mobile payments and wearable devices, alongside the recent surge in online shopping, which has heighted acutely since the pandemic began, interesting patterns are emerging in terms of the future of money and our likely future shopping habits. Will we ever go back to shopping as we did before? Will we ever need to use cash? When would we need to use a high street bank?

The UK has seen a surge in contactless payments in response to the Covid-19 pandemic, in particular since 1 April 2020 when the contactless limit increased to £45. This is a continuation of a growing trend which has accelerated as a consequence of Covid-19, rather than arising because of it.

Last year, debit cards were used for 17bn payments, of which 7bn were contactless. The use of credit cards also rose during 2019, up by seven per cent to 3.3bn payments, with 1.3bn contactless. Meanwhile, cash payments continued to decline, falling by 15% to 9.3bn, although cash was still the second most popular payment method in the UK after debit cards.

Consumers are changing the way they interact with money; the number of people who were not using cash or using it just once a month has more than doubled in two years, from 3.4m in 2017 to 7.4m in 2019. Young people are leading the charge, although 7% of people aged 65 or older were using cash once a month or less frequently during 2019.

When it comes to banking, over four-fifths of adults used either online, mobile or telephone banking in 2019, compared to three-fifths in 2009.

The rise in contactless payments and online banking has irrevocably changed the way we interact with money forever. Not everyone is digitally-enabled, so there are more vulnerable segments of society which need to continue to use cash. We are therefore obligated to help increase digital enablement across all parts of our society, but it is quite clear that the world of banking is experiencing the biggest changes we’ve witnessed in our lifetime. Do we need high street banks if we don’t need cash?

It will be interesting to see over the next 12 months how the online food shopping market will develop and also how quickly the move from cash to contactless shifts, but there are clear indicators that we will continue to increase our demand for shopping online and we will continue to use less cash going forwards.

Nicola McNeely can be contacted at nmcneely@hcrlaw.com or on 07870 261 520.

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About the Author
Nicola McNeely, Partner, Head of Technology Sector

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Nicola McNeely is a Cardiff, London and Ross-on-Wye based solicitor, specialising in commercial.

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