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A decade ago, more than half (60%) of payments were made with cash. However, over the past 10 years there’s been a gradual shift away from notes and coins, with card payments overtaking as the leading payment form in 2017.

Fast forward a few years and the coronavirus pandemic has accelerated this trend, driving the use of not just card but contactless and mobile payments. Figures from UK Finance show that in 2020 contactless payments accounted for 27% of all payments, up 12% year-on-year, while nearly a third of the adult population are registered for mobile payments, an increase of 7.4 million people compared to 2019.

In comparison, cash payments dropped by 35% with 13.7 million consumers using cash once a month or less.

Making adjustments

In the face of this changing payment landscape, the charity sector is having to make significant adjustments, with the shift away from cash affecting a number of traditional fundraising methods.

Research from the Charities Aid Foundation (CAF)  shows that digital payments rose significantly at the start of lockdown in March 2020 and remain at a higher level, while cash donations dropped off and remain lower than usual.

When it comes to retail, consumers are used to being able to choose the payment methods that best suits their needs from a broad range of options. Charities need to be able to replicate this and provide a multi or omni-channel payment system incorporating web, mobile and social payments – as well as point-of-sale systems which accept multiple payment types – in order to maximise donations and stay ahead of the curve.

There are signs that charities are already making the shift towards digital payments – research by CAF shows that 47% have already switched to online fundraising. However, there are still barriers in place, with one in five charities expressing concerns about managing online fundraising effectively and one in 10 worrying about the cost of implementing payment technology.

The rise of QR codes

One of the simplest and most cost-effective ways for charities to embrace digital payments is using QR codes. They’re easy to implement – you can put them on everything from t-shirts to shop windows or send them via email – and you can establish pre-set amounts or a range of values, so people just have to tap and donate. There’s also been a huge increase in QR usage during the pandemic, with people using them as part of the NHS Track and Trace system and in restaurants to access menus, so more people are familiar with the technology and have a QR reader on their phone. Research shows that over 60% of consumers agree or strongly agree that QR codes make life easier in a “touch-free world”, while almost half have scanned a QR code within the past week.

QR codes are also a useful tool in merging digital and face-to-face payments. Charity representatives can still fundraise door-to-door or in town centres, but using a QR code rather than a bucket.

Added benefits of digital payment solutions

Adopting digital payment solutions brings a number of additional benefits for charities, including:

Increased security: Reducing the amount of cash handled reduces the risk of fraud and donations being lost or stolen.

Improved reconciliation: You can clearly see how much money is coming in and via which channels. Even entry-level solutions typically come with a reporting tool which allows you to see in real-time all incoming donations.

Increased donations: People are typically more generous when making digital payments as they’re not limited to what cash they are carrying at the time. Our own research shows there is a significant increase in average donation per head made with card as opposed to cash. It’s also easy to set up recurring payments.

A seamless journey: Customers are used to a seamless ecommerce journey – you can order online and take back in store, for example, or see an item in a shop window and order it using an app. Having an omni-channel gateway allows charities to replicate this experience and build ongoing relationships with donors.

Cost savings: There can be a perception that cost is a barrier to implementing digital payment solutions, however, while there is some upfront investment required, it can be offset by the longer-term efficiency savings and reduced fraud risks.

Sustainability benefits: Increased digital payments reduce the reliance on people travelling to collect donations.

Working with Lloyds Bank

Which digital payment solutions are the right fit for you will depend on your proposition and customers’ needs. We offer a number of solutions – ranging from simple entry-level to holistic omni-channel gateways – and we aim to make it as simple as possible to find the right option for you.

There’s a real appetite for charitable giving in the UK. In April 2020 the Charities Aid Foundation reported that more people had plans to donate over the following 12 months than in the previous year. We can help you make the most of that opportunity.

For more information on payment solutions for your business visit: www.lloydsbankcardnet.com

About the authors

Philip Edwards
Managing Director, Client Development, Cardnet

Robert Morgan
Director, Client Products, Lloyds Bank

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