Thresholds and Tipping Points

I remember learning about thresholds and tipping points as part of my Geography degree.  For natural as well as human systems, there often comes a point when a steady rate of change rapidly increases or decreases, as a threshold is met.  Sometimes the reason for this is understood, and sometimes not.  Often a virtuous or vicious circle is created, hugely accelerating the change.  Sometimes an event can precipitate or kick start it.  Covid 19 will be that event in so many aspects of life.  That most basic human activity, the way we spend money, was already changing, but I believe that this will be a tipping point in what the ‘new normal’ looks like.  

The Decline of Cash

For centuries ‘cash’ has been the normal way to buy stuff, gradually overtaking barter at different times, in different places.  However in recently the number of ways to pay, has proliferated.  Cheques and then bank transfers became standard for larger sums.  Now credit and debit cards, particularly contactless ones, are taking over for smaller transactions.

The Covid Effect

We were already seeing a rapid decline in the use of cash, but now that has suddenly accelerated with new research from Paysafe, showing that only 28% of Briton are using cash at the moment.  And almost half of us are expecting to use it less in the future, as a result of Covid 19.  The fact that a contactless transaction can be completed with a ‘hover’ rather than a ‘tap’ and the increase of the contactless limit from £30 to £45, to help reduce the spread of the virus, make contactless cards even more attractive.  Visa estimate that in the first three weeks of April, the increase to £45 has halved the number of times customers need to enter their PIN.  The rise of the ‘Pays’ (Google Pay, Samsung Pay etc) is led by Apple Pay, which now accounts for more than 5% of global card transactions. The fact there’s no upper limit, and therefore never a need to touch the pin pad, means that a huge number of people are likely to shift to paying in this way.

The New Normal

Whatever the ‘new normal’ way to pay looks like, it’s clear that contactless cards and mobile ‘Pays’ will be a big part of it.  We are leaving the era of cash, and everyone needs to be ready for what comes next.   As soon as in person fundraising re-starts, charities need to be able to receive donations in the way that donors are comfortable giving them.