The spread of coronavirus (Covid-19) has done much to speed up the increase in digital payments. It wasn’t uncommon for small local retailers not to accept cash as late as the beginning of this year.
But now many retailers are shunning offers of hard money in favour of electronic payment as there is some fears about the handling of notes and coins.
Even the local ice-cream man that plays a jingle to alert the neighbourhood children of his presence has made plans to accept card payments! And bigger purchases have been accommodated with the increase of contactless limits to £45 from £30 so there’s no excuse for anyone not to tap and go.
The pandemic may be the major catalyst behind digital payments, but there are figures showing that people in the UK were increasingly going cashless even before Covid-19 hit our shores.
Cash payments accounted for just over half (51%) of payments in the UK in 2019 according to the latest UK Payment Markets report from UK Finance. The report showed that debit cards were the most used payment method in the UK with 17 billion payments of which seven billion were contactless.
The use of credit cards also went up by 7% last year and accounted for 3.3 billion payments. This was driven partly by the increase in contactless credit cards issued last year with 1.3 billion credit card payments made via contactless.
There’s no doubt this trend has reaped benefits for those who’ve been prepared for contactless forms of payments. Supermarkets were the major winners as they were identified as the most popular places for contactless spending last year.
Buying and paying online was also on the increase in 2019. Forty-eight million adults in the UK bought goods and services on the internet last year. Online shopping wasn’t just practiced by the youth. According to UK Finance, nearly four-fifths of those aged over 65 (79%) shopped online.
Of course, paying by card is not the only way to make digital payments. These days there are a plethora of cryptocurrencies to choose from that are becoming increasingly acceptable in the UK. These include the likes of Bitcoin, Ethereum and Ripple, and some lesser-known or newly launched ones such as Libra and EOS.
So, where does the insurance industry stand when it comes to digital payments? It’s not uncommon for insurers to allow card payments online. But as for cryptocurrencies, it appears that at this point the industry is far more ready to offer insurance for this payment method than actually use it.
Just this year, Lloyds of London syndicate Atrium devised a new policy that would insure cryptocurrencies held in online wallets against theft from hackers. That’s not to say that the insurance industry shouldn’t be prepared for all the different types of payments on offer. At SchemeServe we support Paypal, card payments and have mechanism for taking Bitcoin payments and other cryptocurrencies.
We can take payments by mobile phone and through a vast array of different payment providers including direct debit, SEPA (the Single European Payments Area which is used to make cross-border European bank transfers), manual payments and even check payments. We can also offer combination payments of direct debits and other card payments.
It really just depends on what you want and what variety you want to offer clients. Some forms of payments, such as PayPal, may be quite unusual still but that’s not to say they won’t become more popular given time and as the popularity for digital payments escalates. In our view, it’s better to be prepared than risk being left behind.