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Despite the fact that in the UK paper money and coins are still widely used, the society seems to be actively moving towards a cashless future. Moreover, a 2017 Telegraph research states that the UK is third on the most cashless countries in the world list, with the leaders being Canada and Sweden. Such data shows that British customers have welcoming attitudes towards alternative financial tools as a primary payment method, as compared to traditional cash use.
Being issued by the government, fiat currency has a larger degree of legitimacy. The British pound sterling, the U.S. dollar, the euro and other currencies are all backed by respective governments and jurisdictions, and are therefore perceived as more stable and reliable. Despite these beliefs, in 2015, credit and debit card transactions accounted for over 50% of total customer payments in the UK. Different media are claiming that this is signaling the end of cash payments in the country.
Numerous retailers have begun to take advantage of the newly opened opportunities, and started to actively promote online sales and digital payment methods. In 2017, the online retail sector in the UK reached the benchmark of 130 billion pounds in sales. Another large trend that has penetrated the British society is mobile payments, which have become a preferred payment tool for millions. Young consumers living in large cities like London are especially interested in the recently developed technologies and continue to actively promote them.
Experts and analysts suggest that the UK e-commerce sector will continue to grow rapidly over the next 5 years, which might make it the third largest market worldwide, along with China and the U.S. As consumers, UK citizens are viewed as early adopters of innovative developments, such as payment instruments and financial service providers. This suggests that retailers should keep their hands on the pulse of technological and regulatory advancements in order to remain competitive. In addition, the behaviors, habits and preferences of online customers must be taken into account to ensure better and more efficient service and targeting respectively. Millennials and the representatives of generation Z are mainly concerned with finding a simple and convenient solution that would fit their lifestyle and satisfy everyday needs. These are precisely the criteria that they measure their product value by, and which influence their purchasing behavior.
Commerce and FinTech
Individuals are not the only actors contributing to the shift towards the adoption of cashless trends. A major company British Airways has announced that it will cease to accept cash payments from customers in a number of airports, one of them being London Heathrow. This means that if you want to pay for an extra or overweight bag, seat change or upgrade, or change the ticket details, you better have a credit card on you. British Airways also have a friendly attitude towards Apple Pay, and have integrated it as an alternative payment method in their business model.
You probably know, that recently the number if payments done through Apple Pay and Android Pay have skyrocketed. Yet, it will probably be a surprise to you that the use of ATM’s in the UK has also dropped. Instead, smart ATMs are penetrating the market, utilizing digital technology in financial services provision.
FinTech is actively penetrating the various financial sectors in the UK, such as remittance, investment, business banking and loans and credits, which makes it a highly promising and progressive industry. It continues to gradually eliminate all the skepticism around it, becoming a true market evolution that is about to change the future of the financial industry as a whole. Consumers in such developed countries as the UK have high levels of acceptance of the technological innovations that are being introduced, which adds a degree of market volatility and competitive rivalry.
There is a lot to be done before cash money disappears entirely from the UK market and consumers switch to eCommerce and digital payments. However, we can be sure that the socioeconomic tissue of the country is being subject to major changes with the popularization of FinTech.