The Future of Cash with Roisin Levine, Nick Levine & Bailey Kursar: The Spend Show Ep1

Hannah Murray-Sykes •

The Future of Cash with Roisin Levine, Nick Levine & Bailey Kursar: The Spend Show Ep1

The Future of Cash with Roisin Levine & Bailey Kursar: The Spend Show Ep1 from Soldo on Vimeo.

What does the Future of Cash look like? What does this cashless movement means for finance teams? Bailey Kursar (Touco) and Roisin Levine (Flux) shared their thoughts with host Nick Levine (Soldo) in Episode 1 of The Spend Show; a fortnightly LinkedIn Live show for finance professionals.

In this post we recap the key learnings from this episode.

👀 Skip to the end for the full transcript or read on for the show summary.

What you’ll learn…

💸  What the future of finance looks like as we move away from cash

💳  How prepared businesses were for the shift towards cashless during the pandemic

✔️  How contactless and digital payments make operations more efficient

🧑  How to include the vulnerable in the context of a cashless society

Who are the guests?

Host, Nick Levine is a chartered accountant, currently working in the finance team at Soldo. He was formerly the Advisory Lead at Deloitte’s Propel and the Head of Enterprise at ICAEW. His writing portfolio includes the Times, Wired and Real Business

Roisin Levine is Head of Banks at Flux, a fintech building the world’s first API for receipt data. Flux is an award winning graduate of Barclays Accelerator. Roisin was recently nominated for Women in Finance’s 2020 “Young Leader of the Year” and featured as a “Rising Star” in the Women in Fintech Powerlist 2019.

Bailey Kurpar is CEO and Co-founder of Touco, an app that helps people who need support managing their money share access safely with a carer.

🔗 Show Links

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When’s the next episode of The Spend Show?

Head to our LinkedIn page to see upcoming episodes.

The Move Away from Cash

We’re continuously increasing the distance between us and cash.

UK Finance has already raised the contactless transaction limit from £30 to £45 in response to the World Health Organisation’s worries about the role of money in the spread of the virus. 

When the pandemic kicked off, the amount of money taken out from cash points was down 60%. Right now, card payments have taken over cash in the UK, meaning that 90% of payments are through phone or contactless. To add to that, around 8,700 ATM machines have been shut down, making cash withdrawals harder than before.

90% of payments are basically contactless payments or via phone. But I think we will probably be there at some point, maybe three to five years from now. [00:05:26] 

Roisin Levine – Head of Banks at Flux

But that’s in the UK. Despite sharing a similar direction, different countries have different approaches to cash. China, for example, is on the road to becoming the first cashless society after COVID-19. Considering the stats above, the UK isn’t too far behind. 

The pandemic has even pushed Germany towards contactless payments despite their attachment to cash, something that stems from their high regard for privacy and equally high aversion to sharing private information.

The crisis has certainly played a large role in this rush towards digital payments but it’s not likely to die down when the situation ends. 

As a trend that already existed before the pandemic, it will continue to accelerate. 

Were Businesses and Individuals Ready for Contactless?

Contactless requires a certain level of data access that could send trust issues flying through the roof. There are plenty of privacy concerns surrounding this technology.

Despite this, for safety reasons, many retailers chose to accept only contactless payments. 

Businesses and consumers were too preoccupied with trying to adapt and survive the pandemic to worry about sharing their personal data. Though it might seem like a risky move, it had several positive outcomes. It nudged businesses towards a reality where they can use their data to gain insight into their business (more on that to come).

Nonetheless, it was a clear challenge for those who live on the outskirts of big cities. Usually, these locations tend to be more of a “cash society” and may have never used contactless before. Being less digitally capable, they needed some extra support to adapt.

What’s more, the current conditions aren’t suitable for a jump towards digital-only payments. For example, merchants still find some cards incredibly expensive to process, forcing them to set a minimum amount for purchases.

Hopefully, costs will decrease and new roads will be paved.

Improved Business Operations from Going Digital

Beyond consumer payments becoming more digital, companies’ finance and business operations are also benefiting from going digital. One of the most basic benefits is that they make record-keeping easier (e.g. receipts). 

Sending information straight to accounting software stops you from swimming in those receipts. 

Consumers and businesses can also extract valuable insights from their transaction data. Improved categorisation leads to having a holistic view of your expenses. Understanding what you spend more on and being able to actually use that data for the good of your company – that’s a part of the future of finance.

It’s widely known that accurate, real-time data can improve the decision-making process for businesses and overall make administration processes easier, but other things such as digital taxes can also make your life easier.

Of course, not everyone has the same opportunity to leverage technology.

The Vulnerable in a Cashless Society

A lot of people are still more comfortable with cash and don’t feel at ease using contactless and cashless payments. In the UK, 8 Million people still rely on cash, even though this year the number has gone down.

Older Generations

It’s no mystery why older generations prefer cash payments – it’s what they’ve always been used to. But it’s crucial to note that these individuals become less of a priority as they grow older and their buying power decreases. 

Now, there are already people in their 60s who are confident in using online banking and cashless payments. A business must think about its clients while also planning for its future clients.

Low-Income People

Aside from older generations, low-income people have issues with electronic money.

People on benefits or low-income use cash enveloping – a way to track exactly how much money you have in each budget category for the month – to determine how much they can spend. 

At first glance, it might seem impossible to do with only digital cash. But there are already new, digital ways to emulate cash enveloping, like Monzo’s Pots. It works just like the physical version, but on your personal device!

To avoid these groups being left behind, the FCA has released guidelines on how the financial service industry should treat the vulnerable.

Show Takeaways

Here are some of the best bits from the show.

👉 We’re speeding away from cash and are ready to become a cashless society

Roisin: “90% of payments are basically contactless payments or via phone. But I think we will probably be there at some point, maybe three to five years from now.” [00:05:26] 

👉 The pandemic gave us a push that’s helping us leave cash behind.

Bailey: “I reckon it probably has had a big impact in accelerating people’s attitudes and helping people get on board with contactless or using a card.” [00:19:40] 

👉  Digital payments bring tangible benefits to businesses.

Nick: “It’s moving towards that nirvana of accurate real-time data for better decision-making both for businesses and their advisors.” [00:29:12]  

👉 Relevant authorities are putting effort into creating a level playing field for vulnerable groups to include them in a cashless society.

Bailey: “It’s an amazing start to make sure that we protect the needs of those who need, who need casual, who need branches.” [00:23:06] 

Look out for future episodes of The Spend Show on our LinkedIn page.

💬 Full Episode Transcript

Nick    00:03 

Good afternoon everyone, welcome to The Spend Show, a new fortnightly webinar exploring trends in finance and Fintech. I’m Nick Levine, I’m in the finance team at Soldo, a prepaid bank card and expense management solution. Today’s maiden episode is on the future of cash and how this will affect business and consumers. So, we’re really fortunate today to have an esteemed panel.  

To kick things off, our first guest, whose camera should be turning on any minute now, is Roisin Levine. She is Head of Banks at Flux, a Fintech that unlocks receipt data via an API to deliver contactless receipts and rewards straight into your banking apps. She was included in the 2019 Women in Fintech Power list as a rising star and is also nominated for the 2020 women in finance young leader of the year award, and with all transparency, one of her lesser achievements is, in fact, that she’s married to me. 

Nick    00:59 

Our second guest is Bailey Kursar, she is the co-founder and CEO of Touco, a company on a mission to help carers and families manage money better together. She’s also in the women in tech power list and Tuco is a recent graduate of the Barclays accelerator programme. In June 2020 Touco received a grant from Innovate UK to build a care card to help carers spend on behalf of family members and those in need. Ok, in terms of the agenda today, we’re going to break this down into a few different topics, predominantly looking at what the future of finance looks like as we move away from cash; in terms of coronavirus, were businesses prepared for this shift towards cashless; how contactless and digital payments make operations more efficient for businesses and, very much drawing on Bailey’s experience and knowledge, how to include the vulnerable in the context of a cashless society. 

Nick    01:57 

There’s around 8 million people that still rely on cash as a means of economic necessity. So just to try and put that in some sort of ‘bigger picture context’, we’ll break the discussion down.  

If we go back to the start of the pandemic in March this year, the World Health Organization first of all speculated that notes and coins could help spread the pandemic. So, in response to that, UK Finance, which is the trade body for banks in the UK, increased contact limits from £30 to  £45. And at a similar time, UK Finance predicted that by the end of the decade, just 1 in 10 transactions would be cash. So, we’re really seeing an acceleration of this trend already, we’re moving away from coins and notes. And then in March, when the pandemic kicked off, the amount of money taken out from cashpoints was down 60% in the same March period year on year. 

Nick    02:56 

Although interestingly, the amount of money taken out per transaction had increased, which sort of indicates people were stockpiling cash while they could get access to it. We’ve also had 8,700 free ATM machines that have recently been closed and the post office’s banking framework, this is an initiative first introduced in 2017 which tries to ensure that people in society can still get access to cash through the local post office through 11 and a half thousand branches. That was piloted in 2017. At the beginning of this year in 2020, that was extended for another three years. So that means that at least the next three years, people can still access cash and conduct banking facilities through the local post office. And also, finally during the pandemic, it was encouraging to see RBS and the post office introduced a cash delivery service for vulnerable customers.  

So, in terms of the first topic to get our teeth stuck into, I’d like to start off looking at UK Finance raising the contactless limit from 30 to £45. 

Roisin, what are your thoughts on that? Do you think that was a positive move and are there any risks from it? 

Roisin    04:10                  

Well, I’m a fan of contactless payments, so I would say it’s a good move. I’d like to see it go up a bit further. I think so far it’s been well received, so it looks like more people are paying by contactless methods. I know that in some of the smaller shops for buying coffees it’s literally the only way you can pay now. I guess there’s loads of people who would have adopted that anyway, and who may have not done so before. People moving towards Apple Pay as well, so not just paying with your card. But yeah, it looks like it’s been a success so far.  

I think it could probably go up a bit further if things carry on and adoption rates continue. And the UK is now I guess, kind of catching up speedily. We’re way behind where China is in terms of contactless payments, but we’re kind of catching up now to the higher rates of the rest of Europe. It’s really the USA that is quite far behind on contactless rates. But I think, yeah, as a country we’re adopting it and we’re doing it. 

Nick    05:12 

So, do you think perhaps that a good indication of the UK, especially in response to America which is quite sort of slow-moving in regards to consumer-facing financial technology, it’s a good indicator that we’re ahead of the curve in terms of some other countries? 

Roisin   05:26 

Yeah, so I think this has been a trend that’s been going on for a while. I think Barclays was actually the first bank to provide contactless payments by card and then it’s become adopted steadily everywhere. So in some ways we’re kind of the trailblazers of this.  

Card payments overtook cash a while ago in the UK and they just overtook cash in Germany and now they’re leading towards contactless as well. So, it’s kind of like, we’ve gone from card heavy and now contactless heavy.  

As I said, we’re never near quite some of the levels… where 90% of payments are basically contactless payments or via phone. But I think we will probably be there at some point, maybe four to five years from now. It looks like an awful lot of research on this space looks at about 40% of the transactions in the UK and they are seeing 74% of customers and most businesses are pretty much adapted to be able to avoid cash altogether and take contactless payments. Many of them may have waited until now. They’re sort of now, adopting the technology to be able to do that. 

Nick    06:35 

And you mentioned Germany. I mean, that’s quite an interesting case because to my knowledge, they’ve been quite slow at adoption because they sort of still have that emotional attachment to cash. Is that fair? 

Roisin   06:45 

Yeah, it’s an interesting one, they’ve always been historically lovers of cash. And some of that I think comes from, there are a few different reasons, quite an interesting historical context to it, but there’s a kind of view, which is, that with cash, you are anonymous ultimately, right? And this is one of the arguments against the move away from cash is that in some places the idea of actually having that anonymous data, just take the cash out, pay for something, there isn’t a digital trail, something that is quite free and there are lots of reasons why many people would want that and they’re not all kind of bad reasons, actually.  

And so Germany historically has had this belief that, you know, do you really want everything tracked and traced? Cash has been kind of a comfort and for many people cash still is a comfort and there are people who rely on it, much due to reasons amongst other interesting reasons around why they have a love for cash. But on the whole now we are seeing adoption and mainly it’s because of ease of use, and obviously COVID increased those rates because in some places right now, you just generally can’t pay with cash. 

Nick    07:51 

Thanks Roisin. And Bailey, what are your thoughts in terms of cash, the limit in the UK contactless going up from £30 to £45. Do you think that creates any more of a risk in terms of fraud or crime? 

Bailey    08:03 

Yeah, it obviously does. It comes hand in hand at a time when there’s stronger customer authentication rules coming into place, which is a confusing message potentially. And it’s one that definitely has concerned large swathes of the population around the use of contactless and adoption of contactless. I think it makes perfect sense given the context of the pandemic and Roisin is probably right in thinking that that’s a trend that will now start to continue and escalate, but the reality is there is a risk – people dropping their card and that are being used for transactions that they’re not actually okay with. The other part of this is that strong customer authentication piece where a certain number of those contactless payments you are then required to give your pin.  

For online transactions there’s extra authentication that now is in place. So I think the authorities have done a really good job of trying to balance consumer need versus fraud and financial abuse and the problems around that. And I can imagine this trend continuing. Me personally, I’ve used the £45 limit several times, you know. So it’s very helpful, not just in the context of the pandemic, but in terms of pushing it up further than that, those would be, I can imagine that the regulators have concerns about further pushing that limit. So it’ll be interesting to see what happens.  

Nick     09:56         

And then it’s interesting, because I guess with the advice from the WHO, they didn’t actually state that coins and notes would spread it more. I think the advice was, I mean they couldn’t necessarily spread more than other materials. Do you think there is sufficient due process to raise that limit? So obviously you can see how it would be an interest of the banks and UK Finance, but do you think it was fair or do you think it was the direction we were going in anyway? 

Bailey     10:36  

I think it makes perfect sense given the context of the pandemic because part of the problem that we’re trying to solve is wrapped up in why the contactless spending limits were increased as well, in that, if I’m a person who has to shield because I’m vulnerable in a number of different ways, giving my card to someone else to go out and run an errand or pay for the groceries, that’s risky if I give them the card and I say “here’s the PIN number”, that’s the big, big risk. If I give them the card and I say you can use it with contactless, it’s still risky, absolutely it’s still a risk, and it’s not recommended by banks, but it feels like something that is safer. A safer alternative to cash. And often we saw the rates of cash withdrawals going down over the pandemic, the reason for that is a lot of people who would normally be very reliant on cash now feel locked down and unable to go out and get that cash withdrawal. 

Bailey   11:36       

And I suppose then there’s also that there are fewer things to spend on, which is part of it too, but yeah, I think it makes perfect sense to up the limits. And the question is, you know, are there more people now in that demographic who trust contactless vs the beginning of the pandemic? I don’t have data to support it but I’m sure that’s the case. I’m sure people are becoming more comfortable with these newer forms of payment. 

Nick    12:04 

So one for Roisin – in the context of the gig economy, do you think that this sort of rise in moving towards contactless, if you’re a contractor or a freelancer, so does that make transacting easier? 

Roisin   12:28 

I mean yes I guess, it depends on the exact role that you’re in, I think there are few instances where there have been places that have stores that, potentially central London stalls, and that they’ve been able to quite quickly move maybe almost with a mobile kind of coffee van or something like this. And also if you’ve got iZettle or any chip and pin payment method that can be transported reasonably then makes setting up and finding where people now are transacting a lot easier. I think that there’s a lot to be said about small businesses and why maybe a move to card payments as a whole and less handling of cash is super useful. Cash sometimes slows down the process of a sale. 

13:18       

So, I think what’s interesting at the moment – I’ve gone to a few different coffee places I used to frequent and found the actual efficiency of service has gone up in a bizarre way because it got kind of like a one-way system, you can only use card as a one way in / one way out process, and the whole thing has been more formalised. And so in some instances, I think maybe some small businesses will say, well, actually we’re able to transact with more customers more frequently, this is easier than handling cash. And there’s also the kind of safety element as well. And I’m not talking just about the coronavirus. I’m thinking about, you know, about having cash in the till. And if you’re, say, a very small stall and you don’t really want to be there or have to then transfer that cash yourself somewhere else. This is actually a big problem in the US is those people who get mugged and whatnot from the end of the day cashing up. 

14:13  

And it basically just reduces all of that. So, I guess for anyone working in that environment, in some ways the digital move has been helpful, for their business. 

Nick     14:25  

Thank you. And I guess in the context of Flux in terms of innovation related to contactless, what do you think we’re going to see next? 

Roisin   14:34  

And so in terms of Flux, we’re in the business of digital receipts and so we’re the end of that, that kind of transaction. So, if you’re paying by card, we take that information and we take it from the card and then we’ll take it from the merchant and we match that to make a receipt and we do that instantaneously. So after seconds of transacting, you tap your card, make that contactless transaction and then you have a contactless receipt. So no more paper receipt that comes out of the till. And obviously, that’s great in terms of hygiene levels and not having to pass the paper between someone, but also, ultimately you have that instant digital experience where you’ve got the breakdown of what you just spent your money on, in your banking app where it’s a kind of nice, easy place for it to live. 

15:16       

We’re big digital enthusiasts. We believe that the world is moving towards card payments and contactless payments and also contactless receipts. And we believe the right place for receipts to live is the banking app because ultimately that makes a lot more sense than sometimes having things by email, where they often get lost. Someone can then do a lot more with those pieces of receipt. So, you know, what can we tell you about your spending habits, what other useful information can we get from that information now we have it in an accessible, standardised way, and that’s ultimately what Flux is all about. 

Nick    15:53  

So basically the move to contactless means that it’s powering innovation. Because you can use that data to provide insights from a consumer and business perspective. 

Roisin   16:07  

Exactly. It’s basically saying, if we have that digital record of what you’re paying for, you have that information at a high level at the moment in your bank account, so it would say the merchant name and the amount. But you don’t have that breakdown of the items. And that’s a lot more useful. If you think about a lot of PFM tools out there, personal finance management tools, budgeting tools. A lot of them are kind of providing some guesswork based on where you’re spending your money. So if I buy something from Amazon, it’s basically impossible to guess what that is, unless you have the receipt information. What is Amazon now, is it an electronic store, is it a bookstore? I mean it literally sells everything. And so if you have the receipt data, suddenly you can start forming things that are much more interesting to use as it’s kind of granular and saying, well, I actually purchased, you know, alcohol, or you purchased groceries or you purchased some homeware and that’s suddenly so much more helpful. You’re actually trying to plan things. You work out a way of spending your money at the end of the month.  

16:57                                          

So that’s kind of the future that we envision and if we can be part of that move towards helping customers ultimately control their finances and have that further insight – that’s what it’s all about. 

Nick 17:08                               

Great. The Amazon one is a really good point, thinking more with my sort of accounting/finance hat on when you get transactions from Amazon it could be anything. So, it’s not sort of, unless you’ve got that granular level of data, you can’t really assign particular rules cause it could fit into one of 20 different categories. 

Bailey 17:27                              

I’m imagining like, you doing the accounting for the home accounts and going through all the Amazon transactions there. 

Nick        17:36        

There’s about 20 deliveries a day! 

Bailey      17:40            

Oh, no! It’s an addiction. 

Nick   17:44           

Yeah! Cause they’re moving to doing free delivery for home groceries but perhaps that’s a conversation for another time.  

But bringing it back to contactless. No doubt since COVID has hit, we have seen that acceleration to cashless off the back of the spending limits and, you know, certain retailers choosing to only accept payment via contactless. I mean Bailey, how do you think that businesses and citizens in general have coped with that shift? Rather than vulnerable individuals, more thinking about the general population. 

Bailey   18:26                     

It’s hard from our bubble, working in tech to think about the number of people out there who aren’t necessarily vulnerable but have different preferences and different backgrounds and different fears, cause the world that I prescribe to is the world that Roisin painted – an amazing picture. You know, one where we can own our data and know much more in detail how we spend. it’s a world that I would want to use that product and transact using Flux, definitely.  

19:00                      

But there are lots of people out there who have trust issues just around banking in general, so you can imagine that level of data access and that level of privacy concern. But it extends throughout tech, it extends particularly when it comes to Fintech because often the business models are more hidden from the individual so it’s harder to trust that business. 

19:22                     

So, yeah, in answer to your question, I think businesses and individuals throughout the pandemic probably had bigger worries on their plate to be honest than whether or not contactless is “the thing” or not. I think, as I said before, and I reckon it probably has had a big impact on accelerating people’s attitudes and helping people get on board with contactless or using a card. 

19:51 

And that’s certainly born out with the qualitative interviews and work that we do at Touco. So I definitely think that that’s the case. From a business perspective, I reckon it’s probably been challenging. Partly because it’s easy again to say, okay, in London, the vast majority of people do use contactless and have used contactless for a while and like your local coffee vendor who has the stall – they’re very, very happy taking contactless because they’re very used to it. You go outside of London and you go outside of the big cities, even in quite sizeable towns, you will find that people are not used to using contactless. They’re not used to using those cards at all. And so they have to take cash. If you’re a small business, you have to take cash. And so for those small businesses, it may be that now iZettle and Square, and all those types of things are becoming really, really popular, but it also may be that those types of businesses are less digitally capable and need the extra bit of support from local government or from others to get on board with that. 

21:01   

Now, as Roisin already said, there are amazing benefits to a business owner to be able to go fully cashless. I suppose the question is, should they be able to go fully cashless? Is that fair to the consumers around them? At the moment we don’t have a law in this country that says that you have to take cash, but there are States in the US where that is the case.  

This is a huge topic where I could talk for ages! But just to end, I’ll give you a little anecdote, which is that our CTO and myself, when we met, we were looking at lots of different, potential propositions we were testing, and we went on a fact-finding tour around greater Manchester, all the towns that were about to lose, in the next couple of months, their bank branch and just interviewing people around that town. And the two groups that are massively impacted by those branch closures and withdrawal of cash generally. 

22:10 

One is small business owners who, as Roisin was saying, you know – if you cash up, you have to take it to a place somewhere. And that’s a dangerous thing, especially if you’re doing it with a Post Office that’s not designed for that.  

And vulnerable people – so people who have specific needs or older people who actually really appreciate that face-to-face contact. And I think it’s the same thing with cashless. We’re going through a time now, where we’re in danger of leaving some of those groups behind. So for me, it’s very important that the industry recognises that and thinks about how we can address those things. I think the government is doing actually a great job right now – like the FCA just released new guidelines today about how financial services need to treat vulnerable customers. I haven’t read it in full yet, it came out today, but it’s an amazing start to make sure that we protect the needs of those who need cash or who need branches. 

Nick    23:14 

Thank you. And it’s interesting. I know the incoming, new Head of the FCA – he’s earmarked, a particular focus area of his as making sure that vulnerable customers are protected in the context of financial services, so I guess you can see it being related to that. And actually, am I right in thinking it was around 18 months ago, I think it was a European directive whereby if you’re paying via one method of card, you couldn’t be charged a premium or an additional fee.  

Does that ring any bells? It used to be sometimes if you’d go to pay with a certain card, a small merchant might try to charge you a premium of 50p or they might say to you, I’m only going to accept that if you spend above a certain level. And so I guess it’s more the trade-off there being by forcing businesses to not penalize individuals for using certain payment methods, it means as individuals, we can sort of transact easier, but from a business’s perspective, they’ve got to take that incremental hit in terms of if there’s an associated cost of doing that transaction. Have you got any views on that Roisin? 

Roisin     24:30 

I think I do know now what you mean, and yes, I think they’ve stopped the kind of minimum payment amount you have to make to transact with certain things. And obviously there are still cards that I think, for the merchants, they’re somewhat expensive, so Amex is an example. You know, it really is better for all of us when I guess there are more alternative ways you can pay. There are several things to think about. I mean, some of the really interesting things that happen now is that there are things that could potentially in some ways compete with the card network. So, digital payments and some of the big tech companies are now moving into payments. That’s actually an interesting kind of area because there’s this trust issue sometimes around our banking services in certain countries, while there’s also some trust issues actually around big tech. And if that becomes predominantly paying, I don’t know, maybe you have a cleaner or a tradesperson or whatever, and it just becomes easier for us actually to pay them via WhatsApp. Some people, I think actually see that in some ways as maybe more concerning than paying in a way that we’re used to – from your bank account.  

So, yeah, there are interesting things I think are going to start to come up and there will start to be more discussion because there are now more ways to pay. If you’re on an eCommerce site now, and the checkout used to look quite simple, there are probably four or five different methods of payment, you know, you’ve got your card payment, PayPal, you’ve often got maybe a buy now, pay later choice. There are actually a load of different options for people. And potentially it may even become like that in the offline world too. Potentially that’s really confusing, so maybe it’s not so good for everyone. But as long as there’s, I guess, a way that everyone understands, so no one’s left out completely. then it’s probably good. 

Nick    26:33    

Thank you. And I was thinking in the context of what this means for businesses. Making tax digital, something that first started coming in last year for businesses that are VAT-registered above the VAT threshold having to do their filings through the government’s MTD portal – this was actually announced last week.  

The timelines for bringing in all that register and also sole traders with a turnover of about 10,000 pounds from two or three years from now.  

Do you think that forcing businesses to move more towards the digital audit trail creates more opportunities for contactless and makes administration of business even easier? 

Roisin     27:16                         

Definitely. I think that most businesses that start to adopt digital processes, whether that’s bookkeeping or how they take payments – they find that there are benefits, there’s efficiencies there. Record-keeping becomes a hell of a lot easier if you have a digital trail. The area at Flux works in is in that receipts are hugely important for both company expenses and just general record-keeping. So right now, a lot of alliances out there on taking the paper receipt and then OCR technology, which is Optical Character Recognition where you take a photo of it. Or quite often people will not do that right away, but keep lots of receipts somewhere in a place and then think, oh god, I’ve got to, at some point go through those and kind of reconcile where I spent cash or card. 

28:02                                   

That’s actually quite tricky. Where you see it working, hopefully in the future will be that all of that reconciliation kind of happens instantly. So if you are transacting let’s say with a business bank card or your company expense card, the ideal solution is that actually the receipt lives straight away within the banking app and all that information could be passed through to accounting software or expense management platform in one fell swoop rather than kind of having to go, okay, we’ve got these payments here, whether they match up, and what have I actually spent my money on.  

28:30                                                          

That can take off a lot of time and a lot of energy that often comes into the kind of administration of running a business, or even just as a freelancer, you know, working for your expenses. So that’s basically our view is that the less time you can spend doing the administrative side of running a business, the more time you can do on the stuff that’s really good, that’s going to be of need, or on the product development or the sales or all the stuff that is really value-added. And the same is true for the accountant as well. There’s some advisory services that I’d love to do, but if you’re working, doing lots of bookkeeping and messy reconciliations, then it’s not so fun. It’s not like those value-added services that you can buy as easily. 

Nick    29:13 

I guess it’s moving towards that nirvana of accurate, real-time data to make better decision making both for businesses and their advisors. And I guess as we’re coming out – hopefully we’re going to come out of this crisis – making administration even easier for businesses. The OCR point is interesting because I know that one of the criticisms of certain receipt scanning software is that it’s not always able to split out the VAT element on a line basis. If you’re buying a few different items that have got different VAT rates. On flux is it possible to get that sort of line split or is that more sort of an aspiration, do you think, longer-term? 

Roisin   29:54 

Yes, you can get that. So that is a massive benefit and you can also get other information. So, we have further information beyond the receipt, I don’t want to give too much away, but some of the more recent hackathon projects were around that and what we do with that, what can be helpful to a customer, what other things can we maybe display that are useful. So, definitely I think that the challenge for us, and this is not going to change anytime soon is that, paper receipts aren’t going to go anywhere overnight. You still need OCR tech. You need somewhere you can put your receipt or take a photo of it and have that record. For example, I’m not sure that necessarily all the taxi firms in the world will eventually have been Flux-enabled anytime soon. So there’s still going to be the need to take that record. However, as the world certainly moves towards this kind of adoption of digital, the idea is that we will start to see more and more transactions carry a digital receipt. And then ultimately that becomes as prevailing as right now as maybe you could just take the scan or keep that in a drawer. 

Nick30:55 

Thank you. Thanks Roisin. And Bailey. I’m trying to think now in terms of your knowledge and expertise in terms of how the vulnerable continue to be protected, those that rely on cash. Am I right thinking it’s 8 million currently classified as those who rely on cash? Is that right from the access to cash view?  

Bailey   31:16 

Sounds about right, yeah. A huge number of our transactions in the UK are still conducted through cash. I’m sure this year it’s gone down significantly. But the last time I saw the stat, it was something like 40, 45% because it had gone over 50% for the first time. But in terms of card payments, I think it’s really easy to get – because we’re all optimists in tech, I’m an optimist, that’s why I started a business – but I think it’s been easy to just ignore the fact that a lot of people do rely on cash and are comfortable with cash.  

One difficult thing to acknowledge I suppose is that a lot of that generation is going to stop being a priority as they age and they die. So, people who are currently in the middle ages or sixties, much more confident using a smartphone, much more confident using online banking, much happier to use different payment methods. But that’s not to say that there aren’t huge other populations who do use cash a lot. And one of the biggest is low-income people, people who deal with cash in order to make sure that they don’t go overdrawn or they don’t suffer banks taking money out from direct debits that they weren’t aware of. 

Nick    32:40 

Things like that. Yep. 

Bailey   32:41 

Yeah. So you do see lots of people who are on benefits, on low incomes, using cash as a way of what’s called enveloping, like putting cash in different envelopes and saying that’s the cash that I will use for this purpose. And the cool thing is that there are digital ways slowly but surely springing up that can emulate some of those use cases. Monzo’s Pots I use personally for that enveloping purpose. I’ve got a bills pot. And a rewards pot. I have ways of enveloping using digital means, which is great. And I think some of the other things that at Touco we’re very passionate about is trying to understand what other elements around cash people admire and want to use and need in their lives. So, what is it about the tangibility of cash that someone really appreciates and how can we get as close as possible to that using a digital product? 

33:43 

That’s still an ongoing thing that we are looking at at Touco, essentially our care card – which at the moment is called a care card, although it may have a different brand when it’s launched – really it’s designed for that purpose of meeting people where they are and saying you’re used to using cash. There are definite benefits to using cash. It’s that tangible thing that you can keep track of and when you give it to that carer or that helper, they’ll give it back to you with change and a receipt. But with this card, it’s very simple. You can use it, there are no barriers for you to sign up or top it up, and you get the same benefit of giving that small amount over, getting change back and the receipts. And it keeps it all tracked for you. And really that’s at the heart of the work that we’re doing at the moment. Because, as Nick said at the beginning, we’ve been working on this care card for a few months now. Our MVP will be launched later this year. So that’s really what we’re trying to get to grips with so that we can hopefully position it very much as an easy switch from people’s existing behaviour and habits. 

Nick 34:58                                               

And so do you think that the crisis has perhaps accelerated that move towards cashless? The measures, the support, those that are vulnerable and rely on cash have equally moved at a similar pace? 

Bailey    35:14                                                

So couple of people in financial services, a couple of corporates have done really good work. So Starling launched what we call a connected card. If you’re an existing Starling customer, you can create a very simple, limited access card that is attached to a pot in your account, which means that you can then give that to someone else and say, go and spend on my behalf. Obviously that relies on someone having been a Starling customer and having a certain amount of digital capability. NatWest was quick to launch something similar with some of the same good things and bad things about the connected card. And Barclay’s have done something in the same vein with their Pingit product, which is really cool. And then there have been prepaid cards that have been working with local authorities, working with the NHS volunteer service, etc.  

36:14                                                            

So there have been innovations. And I know from our time scoping out this prepaid product that we’re building, people who are building prepaid products, you know, the PFSs, the contactless of the world, they’re very busy at the moment because a lot of the government agencies, or fashioned charities or old-fashioned, big corporates who might have thought of this as a cool thing before, but were “not for us right now”, suddenly they were like, wow, COVID… we’ve got to find solutions really, really quickly. Though I imagine that again, similar to what we were talking about with contactless, a lot of potential use cases, prepaid cards, and new challenger banks will come out of this pandemic, which will be really interesting. It’s already a crowded space, so we’ll see what can come out of that that really benefits people coming out of the crisis. 

Roisin  37:10  

It’s interesting you said that about the crowded space because although it is in some ways, there clearly wasn’t a go-to solution at the start of this, because it kind of reminded me of what you were up to. It said “Age UK received phone calls in the third week of lockdown as older people worried about how they would reimburse neighbours and relatives for their food shopping. In response Barclays, NatWest, and Tesco Bank started sending out cash from the post and some older people were left no choice but to hand over their own cash to strangers and trust them to do the right thing.” So people were doing that whole thing of “just take my card because maybe even the shop doesn’t even take cash. It doesn’t really work. And just go ahead”. So there wasn’t something obvious that everyone knew of. As you said, like we’re starting, that’s great, but we kind of got to that level quite far down the digital adoption route. 

Bailey   38:00      

Yeah absolutely. Apparently Starling has seen 15 000 of their connected cards being sent out, which is phenomenal. Really amazing. I’m guessing though, just using some basic thinking through this, that the numbers and a lot of people using that wouldn’t necessarily fall into the older person/vulnerable category. They might have some people in that category, but I imagine there’s a lot of people there who are using it for other means like as a separate card for their kid or similar. And I think there are several challenges that we at Touco have to overcome. One of which is how do we emulate cash and the tangibility of cash. And the other is a trust point because people of this generation that we’re aiming at, they have concerns that they don’t want to trust their finances with people that they don’t recognise. So absolutely, things that we are working with potential partners on building that proposition so that we can positioned in the right way and make sure that it’s very clear that, at the heart of the care card that we’re building, it’s a safe, separate account. One in which you can top up and you have control and someone using that account or that card will never be able to access the bulk of your money, which is in another place. 

39:21 

So yeah, it’s a really interesting challenge. And as you say, COVID has really accelerated it. We were looking at doing a care card pre-COVID because we know that this is an issue for the 6-7 million people who are on unpaid carers in the UK. And to give you some idea, since the beginning of the lockdown, there’s been an additional four and a half million, people saying that they are now unpaid carers. So we know that this is a big issue. It’s one of those kinds of big issues that’s also not prioritised by banks because it’s not necessarily their customer, it’s their customer’s relative who has the problem. So, it’s one where we still see that there’s a massive opportunity. And thankfully, with the Innovate UK money, we have accelerated the development of that product. And hopefully, by the end of this year, we’ll have some trials ongoing so that we can really start to prove out that it works. Hopefully we won’t have a pandemic loss. 

Nick    40:23                   

Yeah. I see it as really interesting. It’s been a real theme today – the education from the vulnerability issue; educating those target segments of society about the benefits of tools like the care card and the security, and I think that in the business context, outside the London tech bubble, educating consumers on how robust and generally secure in most instances contactless is, I mean obviously there are those sort of limits there.  

Bailey   41:03                    

I think that’s absolutely right. And I would just want to butt in and be the devil’s advocate as well! Because, I think with my Tuoco hat on, I want everyone to be able to access digital tools that work for them. But I also think that there’s an ethical point here, which isn’t just about education. You know, if as a society, we’re willing to force everyone to adopt something that as Roisin pointed out earlier might compromise their privacy against their will, versus having solutions in place that give them alternatives. Because we can do all the education we like, but there may still be someone who doesn’t want that level of intrusion. So I think it’s going to be a really interesting thing over the next 10 years, seeing how governments around the world try and tackle that quite tricky issue because the reality is – it is in government interest, and it’s in corporate interest, to have all of that data. And it might also be in my personal interest, but it’s my choice as a consumer to act on that just as it is my choice as a consumer to be on the internet or use Amazon, right? But no one can exist without spending money. So I think it’s a really interesting ethical dilemma that we’ll see over the next 10 years as these things become more and more niche, and we have like very, very small numbers of people needing this product. 

Roisin     42:27                 

As you said, at the beginning, the ATM, that is suffering a lot because it’s expensive, it’s old fashioned. All very interesting. 

Nick      42:35                              

So I guess I must read it from almost a corporate social responsibility perspective, you know, still looking after those who carry cash. But I guess also there’s potentially a point to be made in that, if the payments industry has all that power, if everyone’s moving towards contactless, would central banks be happy with that power shift, where they wouldn’t have too much control?  

Personally, I think cash is going to be here to stay for a little bit longer and we’ve got to continue to support those that need it rather than force people to adopt.  

So Roisin and Bailey, thank you so much for joining us on the maiden voyage of The Spend Show today. It’s greatly appreciated and we really appreciate your insights.