Cash withdrawals in the UK have dropped by 60% as more people turn to contactless payments amid the Covid-19 coronavirus pandemic.
According to research from ATM network provider Link UK, carried out by YouGov, there will be a long-lasting impact on the use of cash in the UK, with 72% of people saying the pandemic will affect their future use of cash.
Due to the risk of spreading Covid-19 through contact, the use of cash is currently advised against where possible.
The research revealed that there were 11 million ATM transactions, totalling £1bn in withdrawals, in a recent week during the UK pandemic lockdown.
But the use of cash seems to only be going in one direction, with 44% of consumers expecting to increase their use of contactless and digital payments over the next six months.
Other findings include 75% of consumers saying they are using less cash, with 58% of those using cash a lot less.
When it comes to alternative methods of payment, just over half (51%) of consumers said they would use cards more, 44% said they would increase the use of contactless/mobile payments and 34% said they would shop online more.
“The fact people are using less cash shouldn’t come as a surprise, because with cafes, pubs, restaurants and some shops closed, people are travelling less and there are far fewer opportunities to spend in the first place,” said Link CEO John Howells.
“Even if this crisis does lead to less cash use in the longer term, people should be reassured that Link and its members will continue to ensure good access to all who still rely on it.”
For financial technology (fintech) firms currently struggling through the slowdown, changes in how people make payments will create opportunities through a new potential customer base.
Major events bring with them changes in consumer behaviour. For example, had it not been for the global financial crisis of 2008, many of today’s fintechs might not be around. It was a combination of traditional banks cutting back their services and consumers looking for alternatives that built an audience for fintech.
Once people get used to using alternative payment methods such as mobile wallets and contactless cards, they are unlikely to go back to cash.
Fintech entrepreneur Matthias Kroener, who founded an early challenger bank, said there would be a much bigger consumer audience for digital services once the current pandemic had passed.
“Due to new ways of working and living during the pandemic, digital living is not a myth anymore. Even people who had never done a video conference before now know Zoom,” he said.
Russ Shaw, founder of tech startup network Tech London Advocates, said: “I don’t think cash will ever become obsolete, but when we come out of this, we will see a huge spike in digital payment platforms.”