Written by Zara Chechi Published on 29 August 2023 On this page Is Technology Propelling Us Into a Cashless Society? E-commerce: The Momentum Behind Surging Online Payments What is the Social Impact of a Digital Society? What Does the Future of Digital Payments Look Like? Expand Digital payments have become part of our everyday lives but what is driving this and what does the future look like?Going cashless is a move being made by both businesses and consumers as it provides an easy, convenient, and safe way to make purchases. But is this the right move for all businesses in the UK?We explore all this and more in this article where we break down the factors behind the surge in the adoption of digital payments. Is Technology Propelling Us Into a Cashless Society?Globally, cashless payment volumes are expected to increase by more than 80% from 2020 to 2025. The pandemic was a driving force that accelerated this adoption of digital payments but technological advancements have provided us with more ways to make payments digitally.One of these technologies is the digital wallet but you might commonly call it Apple Pay or Google Pay. Other popular digital wallets include PayPal and Wechat. Digital wallets make it easy to make contactless payments in stores or online, as it only takes a few seconds, and for online payments, it doesn’t require confirmation of card details or personal information.Other technology that has moved us towards cashlessness is the ability to make payments with smartwatches and tech like Amazon One. Eerily close to something out of a sci-fi film, Amazon One is a free, contactless service that uses your palm to pay, enter, or identify yourself. Don’t worry though, it’s not scanning a chip in your hand, instead, it uses the unique features on and below the surface of your palm to confirm that it’s you.This collaboration of science and technology has created a form of digital payment that will likely be replicated over time and we might start to see this kind of payment pop up in the market.Amazon appears to be leading the way for contactless payments, if you’ve ever been to an Amazon Go store, you’ll know that feeling of feeling like a thief when walking out with your items without paying for them. Only for accurate payment to be taken later on through your Amazon account.Amazon uses sensor fusion technology, computer vision, and deep learning to make this work. The tech can keep track of what you pick and put back and which items you leave the store with. Adoption of this on a wider scale is unlikely to happen anytime soon, due to a variety of reasons such as security and cost but its existence illustrates how technology shapes digital payments.Buy now, pay later (BNPL) has become a solid fixture in the digital payments market. Payment plans have always been around, especially for large-ticket items such as furniture. But BNPL companies are providing easy accessibility to it, no matter the item or cost. BNPL provides consumers with a quick and easy way to make purchases.Its increased popularity can be nailed down to the fact that more merchants are adopting this form of payment. Plus, it provides a sense of affordability to consumers as they’ll typically see the split payment price at various points in their buying journey.Numbers show that the younger generation are BNPL’s biggest fans, with 59% of Gen Z and 53% of millennials expected to make a BNPL purchase by 2026.Over 200 providers exist offering BNPL options for consumers, including Klarna, Afterpay, and Apple Pay Later. The BNPL market is made up of a diverse range of providers including fintech, big tech, banks, and card networks. The consumer need for BNPL is so high that all of these players can have a slice of the market and merchants can provide a large range of options.Despite its increasing popularity, BNPL is largely unregulated but there is talk that this will change soon. The UK is currently considering whether or not the exemption in the Consumer Credit Act for delayed payment of goods and services applies to this payment method. The European Commission and Australia may look to regulate BNPL soon.The use of cash is declining but according to The Global Payments Report, it will continue to play a role in most economies. In 2022, consumers made over $7.6 billion globally in cash payments. The report also found that cash payments are waning due to governments promoting digital payments and the increased acceptance of mobile payments.The research noted that rather than a cashless society, it’s more likely that physical cash will be replaced by digital currencies. Digital payments will continue to expand and appear in new ways for us to make safe, easy, and convenient payments. E-commerce: The Momentum Behind Surging Online PaymentsE-commerce is a growing industry, and as it stands around 2.64 billion people worldwide are online shoppers. Compared to 2022, that's 80 million more people. Despite these high figures, research shows that consumers (in the US at least) are still eager to shop at brick-and-mortar stores. By 2024, physical stores are expected to make up around 72% of all retail sales in the US.87% of US consumers start their shopping with online searches, and a whopping 74% start their search on Amazon. The convenience of online shopping and access to a range of products is likely the reason for this and is one of the driving forces behind the growth of e-commerce.Another reason is the increased access to e-commerce stores, for example, you can now make purchases directly from social media sites such as TikTok or Instagram all without leaving the app. Digital wallets such as Apple Pay make it quick, convenient, and safe to do so.Another tactic used is personalisation which can be used to draw in customers and provide a better experience for customers.E-commerce is only projected to grow as technological advancements make it that much easier and more convenient to make purchases. Voice assistants like Amazon Alexa allow consumers to make purchases just using their voice.Augmented reality (AR) is used to provide consumers with a rendering of how an item may look and provide them with more confidence to make a purchase.The future of e-commerce looks to be promising for merchants especially as they can continue to rely on technology to provide new ways to draw in sales. E-commerce stores combined with digital payments such as digital wallets or BNPL. What is the Social Impact of a Digital Society?Despite the increasing popularity of digital payments and the ease and convenience it provides, there are sections of society that may struggle and as a result, be isolated from their local communities.According to The Cash Census by the RSA, 10 million people in the UK would struggle in a cashless society. Specifically, this is made up of elderly, younger people who enjoy the security of cash, and those who are sceptical about going cashless.Other parts of society that have been highlighted by critics are people with disabilities as it may mean that they are unable to carry out tasks.The elderly would be hit the hardest with 5 million admitting they would struggle if the country went cashless. Critics argue that going cashless would be ageist as some of the elderly population won’t have access to help to deal with digital banking or other tasks that require digital payments. Those who don’t have assistance will be left isolated and alone.Concerns include access to services such as parking apps which have replaced a large number of pay and display parking machines. This change means that those who don’t have a smartphone or who are unable to operate mobile apps will be unable to do something as simple as parking their car. What Does the Future of Digital Payments Look Like?The current trend and emerging technologies paint a world where digital payments will only become more popular. Digital wallets, smartwatches, and paying with your palm are just some of the ways technology is shaping the way we make payments.The future looks like greater adoption of these technologies across a wider range of services and devices. BNPL doesn’t look to be slowing down anytime soon and cash payments will play an important role in economies even if its usage is declining. Written by: Zara Chechi Business Services Expert Zara is a Payments Expert, specialising in writing about Point of Sale systems. With a Law Degree from City University of London, she has used her legally-honed research and analytical skills to develop expertise in the Business Services world. Featured in FinTech Magazine, she quickly became an expert in payroll, POS systems, and merchant accounts.