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From Cash Point to Cashless

15 July 2019

Barclays has been helping our customers and clients make the most of their money for over 300 years

History of innovation

It was in 1965, after businessman Mr Shepherd Barron arrived one minute late to withdraw money, that he came up with the lightbulb idea of an Automated Teller Machine, or ATM, as we’ve come to know them today.

Barron was quoted saying: “I hit on the idea of a chocolate-bar dispenser, but replacing chocolate with cash.

Two years later, crowds gathered in Enfield, North London, as the star of one of Britain’s most popular sitcoms, On The Buses, Reg Varney, stood in front of a strange machine in the wall of a Barclays branch.

Holding a piece of paper with a mildly radioactive isotype – Carbon-14 – embedded within, Varney was about to become the inaugural user of the world’s first ATM.

From these humble beginnings, where customers required special vouchers from the bank which they would substitute for cash, the way that we deal with money in the UK and, in fact, the world, was completely revolutionised.

The growth of cashless payments

Today, there are roughly 70,000 cash points across Britain, with recent statistics revealing that trust in banking is influenced significantly by this network coverage of ATMs^.

Barclays has always been at the forefront of such innovation in the banking industry, having issued the first contactless bank card in 2007. These changes have naturally brought with them the move towards a more cashless society; although ATMs are still instrumental, only 34% of payments are still made with cash^.

The number of contactless cards on issue in the UK rose from 90 million to 108 million between 2016-17^ , and with 74% of millennials willing to share their personal data with banks, compared to only 49% of those over 55, this trend seems unlikely to slow down moving into the future.

Number of contactless transactions, each month, between 2014-2017

A graph displaying the rising number of contactless transactions per quarter between 2014-17

How will the banking landscape adapt?

Crucially, the cashless banking revolution doesn’t stop with contactless and mobile payments alone. Banks and businesses are consistently driven to develop more efficient methods to keep up with consumer demand for frictionless payments.

This innovation in the payment landscape, supported by the application of APIs to enable third party functionality, holds the potential to allow businesses to provide direct payment capability without the need for Debit Card details.

Recently, Barclays partnered with WeChat, an app which dominates the Chinese market, to allow point of payment terminals owned by Barclays to accept mobile payments. This move not only acted to facilitate tourist spending in the UK, but also highlighted the scope for the integration of payment with social apps in the European market.

It is quite possible that, following the revised Payment Service Directive (PSD2), we will begin to see this banking ecosystem become a reality, particularly following the September 2019 deadline for banks to make their APIs available.

With the number of British online shoppers expected to grow to over 46 million by 2021, these developments present real commercial opportunity for businesses. Coupled with the fact that over two thirds of 18-24 year olds choose to carry out most of their browsing by smartphone, the market for more efficient online payment is undoubtedly strong.

Despite this, the online basket conversion rate currently sits at only 9%, as of 2017. With simple user experience coined as one of the most effective ways of converting customers, it comes as no surprise that frictionless payments are on the list of priorities for the year to come for many retailers.

Moreover, while 26% of online browsers simply forget to complete their purchase, the integration of payment with third parties presents the potential to amalgamate frictionless transactions with the sort of reminder emails and personalised adverts that dominate current omnichannel investment.

Being more than just the next tech development, then, frictionless payments could have a real impact on the current online conversion rate for businesses, marking the next stage in ongoing adaptation to consumer habits.

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