By Matthew Williamson, VP of Global Financial Services, Mobiquity

COVID-19 has accelerated the number of digital payments, as health concerns have led to a decline in the use of physical cash. McKinsey estimates that by the end of 2020, the pandemic will have influenced a 32% reduction in cash usage compared to a decade ago. In the current climate, going cashless offers benefits for businesses and customers alike - from reducing the transmission of infectious diseases to enabling a speedier and more efficient payment experience.

Over the last two months, Google has reported a 300% increase in online searches for the term "cashless payment". SMEs have been quick to ‘cash in' on this and adapt to the ‘new normal.' Since the beginning of lockdown, the number of SMEs in the UK now integrating card payment services has almost doubled to 65%. Yet, less than a third (27%) of British SMEs facilitate solely cashless payments.

Due to COVID-19, 80% of SMEs have reported that their revenues are declining, and more than half fear that they may be out of business within 12 months. Cashless payments offer an opportunity to reverse this trend while driving business recovery.

A survey commissioned by Payment Sense and conducted by Censuswide revealed that 44% of respondents said that lockdown has made them change their shopping habits and they now plan to shop locally. With growing consumer demand for cashless payments, SMEs should focus on adapting quickly to seize the opportunity to retain and grow within this new market segment.

Through my work in technology, payments and cash management I understand the challenges that businesses face in going cashless. During my current role at Mobiquity, we worked with Wawa - a chain of American convenience stores and petrol stations - to create a customer-centric solution to make purchases quicker and more efficient. Through our work with Wawa, we created an ‘Order Ahead' app, enabling customers to order in advance and pay for their fast food via an in-app payment.

Why all SME retailers aren't going cashless

There isn't a quick and easy fix to going cashless. More importantly, it's a journey you have to go on with your customer. Put simply, customers can only go cashless if the businesses they buy from do the same. 

By integrating cashless payments, businesses open themselves up to a world of opportunity. Not only does it create an easy way for customers to purchase products, but it enables businesses to increase their efficiencies behind the scenes too. Bookkeeping and analytics are already crucial for SMEs to gather accurate insights to make smarter decisions for business growth. Digital payments can take this a step further by generating even more useful data, providing merchants with a more complete picture of their business and how to manage it better. 

There are opportunities for all SMEs, regardless of their distribution model, to go cashless. Physical businesses can use electronic point of sale (ePOS) technology to manage sales, payments, records, and inventory. Purely digital SMEs can take this a step further by integrating in-app and subscription-based payments, with the latter helping to boost customer retention and loyalty. Multichannel SMEs can have the best of both worlds with omni-device payments integration. Therefore, going cashless is a possibility for every kind of SME - large or small.

Nonetheless, up until recently, the main barrier to facilitating cashless payments is inertia or not wanting to take on more responsibility. By going cashless, new layers of compliance emerge. For instance, although many cloud or digital service providers offer state-of-the-art security for your digital payments, the business is still responsible and accountable for keeping data secure and complying with regulatory and legal standards. 

Similarly, businesses must ensure they effectively manage their digital business tools throughout their life cycles; once software providers stop producing active support for older technologies, there can be security, regulatory and legal risks.

Doing nothing is not an option

As the world battles COVID-19, cashless payments are becoming a necessity rather than a nice to have - doing nothing is no longer an option. 

At the same time, SMEs don't have to navigate cashless payments alone. Banks and technology specialists can work together to support these businesses and their customers, with a deep understanding of their needs. We must take a human-centric approach to cashless payments combined with the right level of technological expertise to improve the customer experience outcome.  

Recently, there has been a rise in digital payment service providers to support cashless payments. These providers have quickly evolved from offering a digital payments service, to building an integrated network of high-tech products powered by partnerships and analytics. For example, in the UK, EE has recently partnered up with Square to help small businesses accept contactless mobile payments anywhere, any time.

Another example is the partnership between payments fintech, SumUp, and a customer service provider, Solvemate, to create an AI-powered chatbot, enabling merchants to receive assistance through a direct channel and scale up their customer service. The chatbot has achieved a 72% resolution rate (where no further interaction is required), enabling a SME to reduce the demand for agent assistance by 22%. 

An opportunity for traditional banks to up their game

Even though SMEs can bypass banks and go straight to acquirers, there is an opportunity for banks to offer value-added cashless services- helping SMEs to drive resilience and recovery.

With a number of challengers gaining traction and scaling, banks should implement a strategy to help their own SME customers on a path to digitisation. 

A nice example is a major retail and commercial bank in the UK, Natwest, who created a digital payments service platform to support SMEs and are waiving terminal fees until the end of 2020 to help businesses during the pandemic. We need to see more banks like this following in their footsteps. 

Wider impact of a cashless society

With the rise of any business being able to facilitate a fully cashless payments customer journey, there will be wider societal challenges to overcome.

According to the Access to Cash Review, 1.3 million people in the UK do not have a bank account and 8 million adults would struggle to adapt to going cashless. To ensure that nobody is left behind, these customers - largely vulnerable and older people - need to be supported. 

Beyond the need for stronger broadband coverage across the country - which would facilitate digital payments seamlessly and reliably - vulnerable and older people need to be educated on how best to interact with cashless solutions - including guidance on how to use digital technology and online banking. To ensure an effective programme that supports society to go fully cashless, we need to take a human-centric approach combined with the latest technology.