The means through which consumers pay for services is transforming rapidly. Thanks to innovation in cloud technology and a proliferation of payment solutions for ecommerce, mobile and peer to peer, a payment revolution has begun. But will, asks Edward Berks, this proliferation of cashless payment platforms ever see wallets across the UK devoid of all but hard plastic?
A report from former aide to Tony Blair, Matthew Taylor, concludes so. Offering recommendations around fair work, the report suggests that the UK should phase out cash payments in order to help the self-employed be tax compliant.
Taylor told the BBC that jobs in labour are most often paid by cash, including window cleaning and decorating, are worth both £6bn a year and, often, go untaxed. While he did not advocate for the eradication of cash altogether, he theorised that the increasing popularity of digital payment platforms like PayPal would replace the majority of cash-in-hand transactions.
"In a few years time as we move to a more cashless economy, self-employed people would be paid cashlessly - like your window cleaner. At the same time they can pay taxes and save for their pension," he said.
"Most people who do pay for self-employed labour would like to know that that person is paying their taxes."
In India, the country’s Prime Minister announced the discontinuation of 500 and 1,000 rupee notes -- denominations which account for nearly 86 percent of all money in circulation in the country. The move was made in an effort to stamp out corruption and counterfeit notes.
Co-founder of Indian mobile wallet company MobiKwik, Upasana Taku, told Wired that the transition to a cashless society is imminent. With the Indian government introducing a number of measures to discourage cash use, including reducing the daily limit individuals can withdraw from ATMs, they’ve essentially incentivised mobile payment -- all of which offers an interesting look into how the UK might transact in the future.
The call for the UK government to ensure businesses have access to online tools that support compliance is one being answered with the formation of HMRC’s Making Tax Digital (MTD) initiative. Taylor’s report calls on the government to work with providers to ensure these compliance-driven tools are available to the self-employed, based on the principles of MTD.
Small business owners can take advantage of payment industry disruption by embracing cloud-based payment solutions. At Xero, we are focused on making the payments process quicker and easier for our subscribers -- creating best-in-class online invoicing functionality and partnering with providers like PayPal to give our subscribers more choice when it comes to accepting payments. By making the most of opportunities presented by digital platforms and the move to more cashless transactions, small businesses can, in turn, thrive.
At this point, it’s not hard to imagine a future where cash doesn’t change hands. While technology and consumer demands will continue to evolve, so too will the payments sector.
Edward Berks, is Director of Financial Web & Ecosystem at Xero
For other articles on the end of cash, see Forget the end of the round pound, the end of cash is coming around and Do negative interest rates herald the end of cash?