There needs to be more financial education around the benefits of digital payments to ensure that the most at-risk groups aren’t left behind; a new report finds.
The card issuing platform Marqeta has released new research exposing the need for greater education around the benefits of digital payments, to ensure that at-risk groups aren’t left behind.
The research shows a greater focus on inclusive product design is needed to ensure that everyone is brought along the digital journey, with 79 per cent of respondents saying education is needed to help people reliant on cash to adopt other forms of payment.
‘The European payments landscape in 2030‘ survey of 2,000 UK consumers highlighted how 25 per cent of respondents have yet to use digital payments – a figure that rises 63 per cent when concerning people aged 65 and over.
However, there are signs of change. 21 per cent reportedly used digital payments for the first time during the last year. The pandemic has accelerated the drive to a more cashless society. 41 per cent have been refused when trying to pay with cash in the past year and 65 per cent feel it’s becoming harder to take cash out.
Amid rising adoption and enthusiasm for new innovations, 83 per cent of respondents expressed concern that the shift to cashless could exclude the most at-risk in society, demonstrating the need to ensure no one is left behind.
Speaking exclusively to The Fintech Times about the findings of the study, Ian Johnson, SVP, Managing Director, Europe, Marqeta said:
“Consumers should be encouraged to make the shift to digital payments, but this must be backed by adequate support for every demographic and age group. This means banks and fintechs have to prioritise developing more innovative and inclusive digital services for older generations, as well as younger and more digital-savvy users, to help reduce reliance on cash as we shift to an increasingly digital world.
“Creating accessible digital offerings that enable simple, personalised payments for consumers can help ease this transition. For example, digital services that help consumers to keep track of their spending – such as a push notification or text to on their mobile phone to alert them if they are spending too much – could be invaluable to convert cash-only users into digital spenders.”
When delving into the reasons why consumers are still using cash, the survey found that 39 per cent consider cash as a backup in case their card is lost, stolen, or fails; 29 per cent believe they can keep better track of their spending with cash; and 17 per cent believe that using cash decreases their risk of fraud, saying they like to use cash as they think it is more secure than digital payments.
This points towards a need for banks to ensure that they have better digital services to help consumers keep track of their spending, as well as providing secure digital wallet services to act as a backup when physical cards fail.
Despite this need for more support and education, respondents could already see the benefits of going cashless: 55 per cent think a cashless society will make payments easier for everyone, whilst a further 64 per cent believe that a cashless society will make criminal activity harder – for example, money laundering and tax evasion. 51 per cent also noted that the pandemic has put them off handling cash due to hygiene risks.
There is also a growing appetite amongst consumers for new technology and innovation in payments. The survey showed how 45 per cent of respondents want to ‘pay by gesture’ and have a secret signal to authenticate payments as an added layer of security instead of their PIN. Likewise, 57 per cent would be comfortable using a ‘super app’, like China’s WeChat, to make all their payments, whilst 39 per cent stated that they would be open to using asset tokenisation to make big payments, and 10 per cent believe cryptocurrencies are the future and are keen to invest in them.
“Banks must ensure that the benefits of their digital offerings continue to outweigh the benefits of cash,” continues Johnson. “Providing consumers with features that help them to track their spending, as well as adding extra layers of security to minimise the risk of fraud, are critical to ease the transition to an increasingly cashless world.”