This article was written by Guste Sadaunykaite, Head of Brand and Communications at the fintech startup TransferGo.
According to recent figures from the Guardian, the UK has already reached the tipping point of cash usage. 2015 marked the first time in history that mobile contactless payments were preferred to cash transactions and it is predicted that by 2025, as many as 75% of all transactions will be made without cash.
In the past year alone, over 600 branches across Britain have closed their doors to the public, citing the growing popularity of mobile banking and payment applications as the primary reason.
A mobile and streamlined future
While high street banks may be suffering from the growth of fintech solutions, high street retailers can benefit from the technology enormously.
Back in 2014, insight from the Centre for Economics and Business Research (CEBR) highlighted that UK retailers could be in for a £1 billion windfall if they adopted mobile payment solutions in-store.
The primary reason for this boost in revenue was attributed to the increased speed in checkout times. Instead of customers having to hand over notes and coins, then waiting to receive the correct change back, the simple placement of a smartphone over the contactless payment terminal completes the transaction in seconds.
With psychology playing a huge part in purchase decisions in store – the length of a checkout queue has been found to either positively or negatively influence purchase decisions – having a fast moving queue therefore not only reduces existing time inefficiency but has the added impact of encouraging more shoppers to buy, therefore increasing revenue and profitability.
Add to this the fact that unlike a wallet or a debit card, people carry their phones with them everywhere they go, and there is the ability to convert every passing customer into a paying one.
This just isn’t possible if the customer you are speaking to has left their wallet at home or lost their debit card on the train. Mobile payments give you this option.
Fear of fear
With all this being said, and despite the many benefits for both consumer and retailer, there are still those who have their reservations. The fear of cyber security threats and government snooping being the two most prominent arguments espoused by sceptics.
It is important to remember though, that just as people once mistrusted the internet as a vehicle for payment of any source, the quality of modern coding – not to mention the promotional efforts of those involved – mean that overwhelmingly, most contactless payments are reassuringly secure.
Fears of digital ‘skimming’ – the scanning reading of the card in your pocket – far outweigh any evidence that it is anything other than a media scare story. You are indeed far more likely to have your pocket picked.
Further, the Financial Fraud Action UK assessed fraud on contactless cards and devices at £2.8 million in 2015 – equivalent to 3.6 pence in every £100 spent in this way.
Scope to expand
With the security issues clarified, the most exciting aspect of the mobile payment revolution is that there is still huge scope to expand. With our mobiles knowing so much about us – our location, our most used apps, our internet history and contact list – there is scope to offer unprecedented personalisation to make every shopper’s experience unique.
As Blake Morgan wrote in Forbes, how much better an experience would it be for a customer to walk into a shopping centre and receive tailored notifications based on their recent smartphone activity.
For instance if one had been viewing holiday sites, a notification saying, “need beachwear? Visit X for 25% off designer swim shorts” would be very cool for the customer and potentially lucrative for the retailer.
It is all about improving the users experience and with mobile payments and other integrated fintech solutions offering huge scope for growth, the future of high street retail looks very bright indeed