Mercator Blog

Getting Creative with Payment Acceptance as Consumer Cash Use Declines
Date: December 10, 2013
Mercator
Research Team
In the past few months, a couple of news stories from Sweden and the United Kingdom have come out that may provide a look into the not too distant future for payments.

In Sweden, it was announced that a local daily newspaper, the Situation Sthlm, would be sold by homeless persons equipped with mobile point-of-sale (mPOS) devices provided by iZettle. Homeless people have long served as the distribution network for the paper, but as Swedish consumers use cash less and less (cash withdrawals in Sweden between 2008 and 2012 declined by a compound annual growth rate or CAGR of -7.14%, according to the Bank for International Settlements), the paper needed to add payment card acceptance to maintain sales.

In the U.K., it was announced that the Royal British Legion would conduct a trial of donation tins equipped with Near Field Communication (NFC) technology in Birmingham, England’s second largest city, allowing consumers to tap their mobile phones against the tins to donate to the Poppy appeal, a charity initiative to support active and retired military personnel. The Royal British Legion is launching the new donation tins in response to declining cash use as well as the technology’s ability to collect additional information about payers. Rupert Potter, Director of Strategy at Paythru, told Finextra, the British financial services news site, that by incorporating NFC payments the Royal British Legion should “increase the number and size of donations [and] allow Royal British Legion to collect gift-aid on donations and to collect contact details for donors.”

Cash use remains strong in developing markets, but consumers in mature payment markets are using and consequently carrying less cash than before, so staying current with consumer payment trends is vital to the success of firms and charities like Situation Sthlm and the Royal British Legion that largely accept small-ticket transactions. mPOS devices like iZettle, PayPal Here, mPowa among many others are one possibility, and utilizing emerging payment technologies like NFC and contactless is another.

While each mPOS solution and emerging payment technology has its advantages and disadvantages, both methods represent very effective means of shifting traditionally cash-based transactions to electronic payments. According to Mercator Advisory Group’s 2013 CustomerMonitor Survey Series, the leading influence in using cash across age and income demographic groups was that cash was more convenient for small amounts, with nearly 79% of respondents stating so.

Although only time will tell if the moves by Situation Sthlm and the Royal British Legion are successful, they do give us a glimpse of what might be in the near future given present consumer payment trends. Probably not this holiday season, but it could be soon that rather than large donation tins or buckets, Salvation Army volunteers dressed as Santa Claus will be ringing their bells in one hand and either accepting card payments through mPOS devices or processing NFC and or contactless payments with the other hand.

Follow Tristan on Twitter @THugoWebb.