The cashless payments opportunity for local authorities

Civica Payments Managing Director Andrew Stenton explores the rate of change in payments solutions and the opportunities for the future

There is no doubt that the UK is at the tipping point of huge developments in cashless payments and finance technology. We’ve seen a rapid uptake in the use of mobile technologies such as Apple, Android and Samsung Pay, and contactless payments, alongside the use of digital currencies such as bitcoin and GovCoin. With half of Britain’s population keeping less than £5 on their person at any one time, cashless is here – and here to stay. This dramatic shift in the way the general public shops, clicks and pays presents both challenges and opportunities for all commercial operations, including the public sector.

In light of this, we gathered a panel of private and public sector leaders at our recent Leadership Forum to discuss the cashless payments opportunity for local authorities. It was agreed that councils should investigate or plan to use cashless payment methods to help break cycles of dependency on frontline services, and ensure the right resources reach the right individuals in a timely manner. However, they must adapt quickly to reap the best rewards. No council can afford to be left behind, and their communities must be suitably prepared for the journey.

Enabling data-driven decision making
Alongside time savings and faster, streamlined services, cost-savings are a major benefit of moving towards cashless. A recent Mastercard report stated that electronic payments are proven to boost economic growth while advancing financial inclusion. For these reasons, nations, governments and local councils are working to make their payment systems less dependent on cash.

Data insights from transactions can also help councils to structure services better and respond to situations in a timely way. For example, councils can issue pre-paid cards to help local residents with the digital transition. One of the less obvious benefits to this is how the data can be used to improve the responsive nature of front-line services; in one instance a resident, considered vulnerable, who always withdrew a small amount from a cash machine every day failed to do so. This triggered an exception email to his caseworker who visited and found him needing medical attention. 

With such a diverse audience to capture, including the elderly or those lacking in digital skills or infrastructure, clear communication is vital around the launch of any cashless campaign"

Securing community buy-in is key to the success of any new initiative, however in a time of big data (information overload) and unprecedented choice, confusion is rife. With such a diverse audience to capture, including the elderly or those lacking in digital skills or infrastructure, clear communication is vital around the launch of any cashless campaign. To counter confusion, councils should work with sister services such as the Citizen’s Advice Bureau (CAB) to offer welfare advice, encourage use of direct debits or recurring card payments and teach effective budget management. In some cases, paper-based systems and physical pay points will still have a place and councils need to remain flexible in their approach. 

Forward-looking councils, such as Ealing Borough, prove such a change is possible. Ten years ago, it moved to a self-service strategy, giving its citizens bar-coded bills and PayPoint accessibility. This reduced the manual data entry needed, bringing down costs and increasing time efficiencies. 

The London Borough of Waltham Forest has also boosted customer experience by installing an ecommerce solution to drive more payments online; its ‘online shop’ for products and services such as council tax and licenses features a shopping basket for multiple items and final check-out and payment. The council worked towards going cashless with its ‘Pay it Online’ campaign and achieved great results in reducing cash and cheque payments significantly. 

The nation is waking up to the mutual benefits of digital-first initiatives like this, and forward-thinking councils continue to embrace payments innovation, driving out cash from their operations. Currently, around 108 British councils offer Mastercard pre-paid programmes, and 2,000 public sector bodies use cards to streamline their back office. These numbers are set to grow.

For councils considering digital payment solutions, it is essential that they are secure, tailored and streamlined to ensure quality of user experience from customer transactions through to back-office accounting, return on investment (ROI) and long-term viability. 

Ensuring financial inclusion 

However, it is also vital to ensure that for citizens, ‘cashless’ does not mean ‘financially excluded’. According to a 2017 report from the CSFI, more than a million adults in the UK still do not have a bank account and about 2.5 million people use expensive and largely unregulated home credit (doorstep loans). A joined-up structure for cashless payments – a cashless structure which works for everyone, including the most vulnerable in society – is required to enable councils to bring all aspects of cashless payments (including direct debit) systems together. 

In today’s digital age, people expect to make payments easily and securely, at a time which is convenient and via channel of their choice. Cash is becoming an increasingly expensive commodity to manage, for all parties involved. 

A need to keep pace

The entire panel agreed there would be a sharp shift in the next three to four years as we reach a tipping point. As cashless payments continue to grow in popularity throughout the private sector, public sector confidence in this game-changing technology will follow suit at a rapid pace. 

Local councils need to build capability and find solutions for the unique challenges in their area. There is no one-size-fits-all approach when it comes to improving payments and financial inclusion for all citizens, but there are partners in the commercial sector who can help with the transformational journey towards cashless. Issues such as customer convenience, data security and compliance are only set to grow in scale and importance as the technological revolution in payments accelerates. So now is the time to tackle those issues, not only to reap the major benefits that cashless can offer but also meet the future expectations of all citizens. 

Andrew Stenton is Managing Director, Civica Payments