Cash could be making a comeback. No really. After years of pushing to a fully digital payments landscape that will in theory see a cashless economy in the (reasonably) near future, it could all come tumbling down after a series of technical issues that has seen major retailers unable to process card or contactless payments and once again relying on notes and coins.
Sausage roll giant Greggs has become the latest retailer to fall victim to technical problems affecting payments, with branches across the country staying shut today as they are unable to take contactless or card payments. This follows two of the largest supermarket chains, Sainsbury’s and Tesco, experiencing similar problems over the weekend. Sainsbury’s was unable to take contactless payments in-store due to an “error with an overnight software update”.
Not only were in-store payments affected, but the “vast majority” of online grocery orders were also unable to be delivered.
It was a similar story at Tesco, which was also hit with issues that impacted order deliveries due to another “technical issue” with several customer online orders being cancelled, as well as similar issues with contactless at check out.
Martin Quinn, campaign director at Payment Choice Alliance personally experienced the issues while trying to shop at Sainbury’s over the weekend.
He said: “Millions of people have been very inconvenienced with IT outages with Sainsbury’s and now Greggs.
“We are told that going cashless is super convenient, is quick and easy, but when card systems crash, these businesses can’t seem to cope, and they don’t have adequate backup procedures in place to accept cash payments. Secondly, people who don’t carry enough cash are increasingly left high and dry and can’t pay for their goods.
“My advice would be to always carry cash because cash doesn’t crash.”
Digital Payments
The push for digital payments has been a well-known characteristic of the industry for the past few years. In an age of technological advancements and evolving consumer demand, cashless societies are at the forefront of future innovation. According to research from UK Finance, half of all payments (50 per cent) in the UK were made using debit cards in 2022. Alongside this, contactless payments were used extensively throughout the UK with 87 per cent of people making contactless payments at least once a month or more frequently.
Of course, there are plenty of benefits to digital payments. Enhanced security and better protection as well as speed and convenience are some of the major pros we see touted by the experts.
As William Ip, head of payment methods (APAC) and country manager at Unlimit, said: “The convenience, security, and widespread acceptance of digital payment methods have made credit cards, mobile payment apps, and online banking the go-to options for seamless and secure transactions worldwide. As digital payment technologies continue to advance, the importance of physical cash diminishes, making access to cashless relevant in today’s digital-driven world.”
Simply tapping your phone to a terminal is much easier than fumbling through your wallet for change. But when suddenly that doesn’t work, you have angry customers left with no way to pay, as who carries cash any more?
Small-scale failures can lead to speculation and massive disruptions
Ryta Zasiekina, founder of fintech CONCRYT believes this situation shows the need for a wide choice of payment methods is crucial.
They said: “The recent widespread IT issues impacting major retailers like McDonald’s, Sainsbury’s, Argos, and Tesco, which resulted in disruptions to contactless payments this weekend, is concerning for the payments industry. While the companies involved have attributed the problems to technical issues, there’s also speculation about potential cybersecurity attacks.
“This has fuelled various conspiracy theories on social media, highlighting concerns about the risks associated with a cashless society. Such events not only undermine businesses but also cause significant disruption. It’s a stark reminder of the importance of offering diverse payment methods to ensure continued revenue generation in the event of card system failures or other unforeseen circumstances.”
Thomas Gillan, CEO of payment firm BR-DGE added: “While details are still yet to be confirmed on the root cause, instances like this show how outages and payment failures, even on a small scale, can create huge disruptions for businesses trading abilities and customer satisfaction.
“Together, issues such as these show the importance of building resilient and robust payment processes. Many larger retailers and merchants have transitioned to using multiple payment providers so that they can manage large volumes of transactions across different platforms and routes. However, this transition can create payment ‘pinch points’ and needs to be managed carefully to reduce the risks of outages.
“To limit these risks, more merchants are considering payment orchestration technology which puts backstops in place, limiting failed payments. One major benefit of this technology is it can re-route transactions away from the affected platform to one that is available, ultimately, preventing payment failure, protecting revenue, and ensuring customer satisfaction at the checkout.”
Cash is back
Despite the promise of a cashless world, there are still many that rely on cash in their day-to-day lives. On stage at PAY360 conference in London’s ExCeL, Jessica Richards, head of market development and payments at NatWest, commented on the fact: “while cash is in decline, it’s usage is actually going up in the younger generation”. She pointed to the popular trend of ‘cash stuffing’ on social media – allocating monthly budgets for certain expenses and putting the corresponding amounts of cash into envelopes.
Plus in the past, the BBC has reported that “10 million people would struggle to cope in a cashless society even though only 17 per cent of payments are now made with notes and coins.”
Andrew Martin, founder of SMEB, a fintech company for small businesses, agreed with this and said: “The card payment issues experienced by some of the UK’s largest businesses over the past week have shone a fresh light on the continued importance of cash in today’s society. It is the latest sign that the march to a completely cashless society is a bad idea.
“Millions of customers still recognise that cash is a convenient and secure payment method, and they like that it won’t simply disappear – even if your internet reception does.
“Unfortunately for businesses, getting your hands on it is not as easy as it used to be. The UK has lost 6000 branches of banks and building societies since 2015, meaning that access to crucial financial services, such as the ability to withdraw and deposit cash at the end of the day, is no longer possible in many areas. Action is urgently needed to solve the UK’s banking deserts. For every day that we have to wait, local businesses will suffer.”
A resilient industry
Despite this outpour of disgruntled customers on social media, there has also been praise for the industry for resolving the issues despite the public pressure.
Scott Dawson, head of sales and strategic partnerships at DECTA said: “Despite the evident challenges posed by these IT glitches, it’s remarkable to witness the resilience and agility of the teams involved in swiftly resolving what initially appeared to be catastrophic technical failures.
“The speed and effectiveness with which these teams have managed to reassemble the technology speak volumes about the dedication and expertise within the industry. Amidst the pressure and scrutiny, their ability to rapidly reassimilate technology highlights their commitment to ensuring minimal disruption to business operations. It’s a testament to the tireless efforts of these teams and the strength of the industry as a whole in overcoming adversity and delivering results under fire.”
Alan Stephenson-Brown, CEO of Evolve added: “News that major retailers have fallen victim to a series of IT outages is a timely reminder that even large corporations aren’t immune to IT troubles.
“Greggs, McDonald’s, Sainsbury’s and Tesco lost millions of pounds as a result of these technical issues, highlighting that digital disruption is a principal risk for many retailers. Ensuring contingency planning is in place is vital.
“I would urge businesses of all sizes to put operational resilience at the forefront of the business agenda. Firms can avoid being next on this growing list of high-street names by introducing highly proactive monitoring and security capabilities, so they see what their systems are doing in real-time.”
A look to the future
There’s no saying what effect these recent issues will have on the future of the industry, but for consumers and businesses alike it certainly serves as a reminder that tech isn’t infallible. As wonderful as the conveniences of modern life can be, they can all come crashing down at the mercy of something as simple one failed software update.
As one X user said: “This is a big wake-up call for everyone who’s over-reliant on contactless pay.”
