On 28 March 2017, the Royal Mint released the new 12-sided £1 coin. It will replace all round £1 coins by October when they will cease to be legal tender. Judging by the stir caused from the introduction of the new £5 polymer note, it‘s fair to say that the transition from paper to plastic hasn’t been as smooth as the government hoped. To avoid a similar situation from happening this time round, the government is urging businesses to begin preparing for the introduction of the new coin in advance.
The transition to plastic and the debut of the 12-sided £1 coin, however significant, will only affect traditional payment mechanisms and is unlikely to hinder the movement towards a cashless society.
According to the UK Payments Council, while cash was the most popular payment method in 2015, consumers are increasingly turning towards payment cards.
By 2025, payments using debit, credit or charge cards are forecasted to account for at least 50 per cent of all payments made in the UK according to Payments UK. Debit cards are expected to take over cash as the most frequently used method of payment in 2021 – a growth largely attributable to contactless payments. These now account for one in four card payments in the United Kingdom, according to the UK Cards Association.
The shift towards cashless transactions is largely driven by changing customer preferences and expectations arising from an increase in digital across all areas of life. The internet has wired consumers for instant gratification and the advances of Google, Amazon and Apple are reinforcing these expectations.
Customers are now demanding a faster shopping experience and that includes their payment method. According to the ACS Local Shop Report 2016, close to 80 per cent of customers still pay by cash at independent convenience stores, which is likely to change as the UK develops further into a predominantly card-based society.
Insights from the Local Shop Report 2016 reveal that while 41 per cent of all convenience stores now offer contactless and mobile payments compared to 33 per cent in 2015, it is likely that co-operatives and multiples will account for the majority of convenience stores offering contactless.
With contactless payments fast becoming the primary payment method of choice for many, convenience stores and in particular independents, need to be aligned with their customers’ preferences or risk losing out on footfall and larger basket spend.
Retailers can rest assured that offering contactless payments does not have to mean a huge upfront cost. Those who can offer card payments should check if their card machine is capable of taking contactless payments as it might be a simple case of activating this functionality.
However with new technologies constantly emerging and the introduction of new payments-related legislation increasing competition in the market, the payments landscape is likely to look very different in five years’ time.
Changes in payments can make it difficult for retailers, particularly independents, to keep up. It is therefore critical for independents to choose payment technology providers such as PayPoint to help future proof their business and readily adapt to changes in the payments scene. PayPoint can offer both integrated card payments capabilities including contactless and mobile payments, as well as EPoS for convenience stores, through its latest state-of-the-art retail platform, PayPoint One.
Convenience stores need to be ready to reassess their payment options to ensure they are meeting consumer demands.
(A Retail Times’ sponsored article)