Transport for London (TfL) is planning to launch a public consultation on making card payment facilities mandatory in London black cabs by 2016. Under the new proposals the surcharge currently levied when paying by card would be scrapped and the average cost of a card transaction will be included in the standard fare, meaning passengers would pay the same amount regardless of their payment method. People want progress in payments For years there has been talk of the rise of a cashless society and although consumers are generally resistant to change, research conducted for Mintel’s Consumer Payment Preferences – UK 2013 report shows that some people are eager to see progress. Some 59% of adults agree that payment companies should be doing more to make payments more convenient and efficient. Moreover, 18% of UK adults agree that they would prefer to stop using cash altogether and 26% say that they are undecided, showing that they are at least open to the idea. Opinions such as this show the motives behind firms as varied as Visa, Google and PayPal, which spend billions of dollars on trying to invent a truly revolutionary mobile payment system. London calling for cashless A closer look at the demographic data reveals a significantly high proportion among those living in London (30%) who are happy to stop using cash altogether. This reflects not only the head-start the capital city has on the rest of the country in terms of payment infrastructure, but also the fact that new payment technologies tend to be launched in London first. It also suggests that were a cashless society ever to arise in the UK, it would start in London. Consumers are increasingly keen to be given the ability to choose their payment method. Cabs without card payments often leave the passenger no choice but to pull up at an ATM before the end of their journey. Meanwhile, card providers are pushing for increased use of cards across all services and retail goods. The black cab industry itself is actively objecting to this push, despite the fact that it could help close the gap between taxi app-based firms, such as Uber and Hailo, and drivers who prefer not to sign up to third party services. This reluctance highlights one of the major barriers to widening the use of new payment technology. TfL drives forward change We can see TfL taking steps towards a cashless society by planning to make card acceptance a mandatory requirement in London’s black cabs within two years. This follows the roll out of contactless payments on buses, which was introduced in July 2014 and will be extended to include tube, trams, DLR and London Overground trains in September 2014. But black cabs hold on to cash payments Some black cab drivers already accept cards, but many opt not to because they are reluctant to incur installation and running costs for card terminals as well as the interchange fees for each card transactions. The move to enforce the availability of card payments in London’s black cabs is an indication that although businesses may be reluctant to accept a cashless society, they will soon have no choice but to accept a wider range of payment methods, either because of regulation, or simply in order to remain competitive. It is not just consumers who do not like change; plenty of business owners are just as wary, particularly as there are usually significant costs associated with any kind of change. If take-up of new tech among businesses is patchy, then there is much less incentive for consumers to change their habits. A sizeable minority of the consumers that Mintel surveys, like the idea of being able to use their mobile to pay for goods and services. The idea of being able to leave their wallet at home will seem a lot less attractive if they find themselves facing a long walk home in the early hours of the morning, all because they could not find a taxi driver who will accept mobile payments. For more information please see Mintel’s Credit Cards – UK 2014 and Consumer Payment Preferences – UK 2013 reports. Chryso Kolakkides writes reports and analyst insights for Mintel’s UK Financial Services team, providing analysis of market trends and developments within the industry. Prior to joining Mintel in 2013, Chryso worked in a number of client-facing roles in the banking industry, both in the UK and abroad. Her experience ranges from retail banking to commercial as well as wholesale banking, managing client relationships with European financial institutions, companies and affluent customers internationally. You might also be interested in: No related posts.