COVID-19 impact on cash payment threatens industry viability

21 May 2020, Smart Machines

With ‘dirty cash’ identified as a medium for transmitting COVID-19 the final curtain is slowly closing on cash payment – clearing the way for another stellar rise in contactless payment

 

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Contactless was already enjoying huge growth pre COVID-19 

For a long time cash has been king in the Vending market. However, with innovation in contactless payment technology and corresponding growth in consumer adoption, momentum has steadily grown towards a time in the near future when the majority of vending machines only take contactless payment. 

That was in a world before COVID-19, a Global crisis the likes of which few of us have experienced and none will ever wish to experience again. Though cash use was predicted to decline over the coming years, COVID-19 has catalysed an acceleration in this decline, due mainly to findings by Scientists that ‘infected’ cash was causing human to human transmission of the disease.   

LINK ATM has undertaken weekly consumer research with YouGov since early March to understand how shopping habits and cash payment has changed during the COVID-19 pandemic. The conclusions are stark for retail and hospitality services where there is still a dependency on cash payment. Alongside the estimated 50% of consumers who no longer carry cash, the findings point towards a further significant shift in the use of contactless payment by the 50% of consumers who still do carry cash.  

LINK ATM COVID-19 Data

Source: LINK ATM  

COVID-19 has accelerated consumer adoption of contactless 

To minimise personal risk and prevent further transmission of the virus, more consumers than ever utilised contactless during the pandemic. With that behaviour firmly established in the last few months are unlikely to return to payment using cash. The authorities also played their part by increasing the contactless payment limit from £30 to £45 on 1st April 2020. Thus encouraging consumers to opt for contactless transactions rather than handing over cash.  

Stephen Jones, chief executive of UK Finance commented: “The payments industry has been working closely with retailers to be able to increase the contactless payment limit to help customers with their shopping at this critical time for the country. 

“This will give more people the choice to opt for the speed and convenience of purchasing goods using their contactless card, helping to cut queues at the checkout.” 

Although increasing the spending limit in itself may not be relevant to vending, it will foster a positive and lasting change in consumer behaviour and attitudes. In tern, that will ultimately accelerate the adoption of contactless payment to the extent that it will become the de-facto payment method for all transactions. Hard cash in its current form will simply be unable to survive this fundamental shift in consumer behaviour.  

Consumers are rejecting ‘dirty cash’ – with contactless the clear winner 

Corona virus moneyIMAGE CREDIT: REUTERS/DADO RUVIC 

In a recent Mastercard survey focused on the implications of the coronavirus pandemic, 82% of respondents worldwide now view contactless as the cleaner way to pay. 74% state they will continue to use contactless payment post-pandemic. Some even avoided withdrawing or handling potentially dirty cash all together, with ATM transactions down by over 60% since lockdown began. 

Today consumers are fearful due to concerns that cash handling is dirty and may be another way COVID-19 can be transmitted and spread. The retail industry has accentuated this hysteria with many shops and supermarkets refusing to accept cash payments, offering card transactions only.  

I know a lot of merchants are putting signage up at the point of sale, ‘Please use contactless” said Linda Kirkpatrick, a Mastercard Executive who works with banks and credit unions.  

Mastercard COVID-19 Data

Source: Mastercard 

This change in consumer behaviour and attitude towards cash, combined with concerted efforts by retailers and banks to drive consumers towards contactless payment, has major implications for vending. Vending machines with cash only payment will be increasingly unusable by the vast majority of the population. 

 

How can Vianet Smart Machines help benefit from this change in consumer behaviour and the demise of hard cash 

Vianet Smart Machines provides an innovative end to end contactless payment solution for automated retail, vending and selfservice machines.  

Whilst contactless payment offers consumers a clean, flexible and low risk payment option, the benefit for vendors of utilising this technology cannot be understated. Machines equipped with contactless payment regularly experience increased sales, with corresponding growth in machine profitability and significant improvement in operating cashflow. 

Managing Director of Smart Machines, Rob Little said “Make no mistake, this pandemic is a serious wake-up call for an industry dependent on cash payment. The consequences are stark in that we are now faced with the possibility of business viability being challenged by too few consumers carrying cash and too many machines not equipped to accept any form of payment other than cash. If that is not a challenging enough prognosis, when many operators required cash to survive this crisis it was locked inside machines in customer premises that could not be accessed. Given that scientific experts are forecasting further outbreaks of the virus in winter and beyondit is critical that vendors are as prepared as possible for that scenario. The industry solution lies in adapting rapidly to this powerful shift in consumer behaviour and mitigating the threat of future outbreaks by equipping vending machines with contactless payment capability 

The vending industry has huge potential to thrive from this pandemic by responding positively to changing consumer behaviour. Contactless payment will play a pivotal role in that response as it benefits both the consumer and the vendor. Put simply, there is no downside risk, and with the cash from contactless transactions available in your bank in a matter of days, that can only mean a stronger and more robust business.    

UK Finance Data

Facts around the revolution of contactless payment. source: UK Finance. www.ukfinance.org.uk.  

What do Vianet Smart Machines customers say? 

JW Vending are testament to the revolution of contactless payment in the vending industry and the success of Vianet’s Smart Machines solution.  JW Vending’s Chris Worgan said “We have been using Vianet for nearly 4 years. Their product has been invaluable to us and we are seeing enormous gains as contactless payments continue to rise dramatically. In the last 4 months alone we have seen a complete sea-change in payment – with almost two thirds of our sales now being made through contactless transactions. On top of this, we have been consistently impressed by their exceptional customer service and knowledgeable representatives.”  

Vianet offer an end to end solution offering both data communication and contactless payment. Their Smart Machines products include their vitel™ NANO telemetry device, that operates in conjunction with Vianet services to provide real-time management of Smart Machines. This extracts data electronically from the machine controller and transfers this data at regular intervals to Vianet hosts system via a mobile network connection, creating customer-specific reports can then be viewed over a secure internet web sitevitel™ NANO supports operation as an MDB Cashless System operating in harmony with the Vianet Contactless payment solution 

With their own in-house engineering and support team, set up and installation of these products into existing vending machines, as well as new machines couldn’t be easier. The contactless payment solution is compatible with all major vending machine manufacturers, and is a PCI accredited solution providing secure protection of the operator and customer’s money and card holder data. 

Interested to find out more? Smart Machines powered by Vianet can drive your vending business forward and help you increase your revenue. Speak to us today 

 
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