The COVID-19 pandemic has wrought havoc upon every single country on earth, and the United Kingdom, unfortunately, is a glaring example. COVID-19 has had ramifications on UK investing, and savings, because almost 22% of Britons became unemployed during the height of the pandemic in April of 2020. Most industries in the UK have taken major hits, with housing, retail, food and beverage, and hospitality getting almost obliterated.
The UK office of National Statistics recently reported that from April to June of 2020, COVID-19 lockdowns shrank the UK economy by 25%. Most experts agree that recovery will not come swiftly; Andrew Baily, the Bank of England governor, goes as far as stating that the economic recession resulting from COVID-19 will qualify as the worst in 300 years.
The Organisation for Economic Co-operation and Development also believe that the UK economy will contract the most out of all countries it covers. A recent study also found that almost no industry in the UK is immune to COVID-19’s economic devastation. Although social-distancing and people’s reluctance to gather in highly frequented public places such as clothing stores, restaurants, hotels, and pubs have hurt the aforementioned industries’ revenues, business owners are beginning to adapt to a world with COVID-19.
Grocery-stores, providing essential goods like food and hygiene products, have traditionally relied on large numbers of in-person humans to physically visit their shops, quickly savvied up to social distancing norms by beefing up their online platforms. Indeed, a recent consumer survey of over 1,000 shoppers indicated a 130% increase in online purchases for retail and food goods. What’s more, however, is how these shoppers made their purchases.
Obviously, one cannot use cash when sitting behind a tablet, laptop, or smartphone in the confines of one’s home for the procurement of goods. While many consumers use traditional debit and credit cards to purchase goods, other forms of payment are quickly picking up steam.
One major fintech company based in the United Kingdom, saw a seven-fold increase in users when it decided to launch a person-to-person transfer product on its APP in mid-April.
Users can buy many types of currency on its platform, which backs up all purchases in gold. Another UK-based fintech unleashed a pre-paid debit card that can be topped up with either cryptocurrency or traditional currency amid the pandemic.
The transition to a cashless society in the UK did not begin with innovations during the pandemic, however. Cash usage has steadily declined in the UK over the past decade according to a 2018 report by the Ministry of Finance. While debit card use is the most preferred method of payment, many UK citizens are becoming more aware of cashless APPs and cryptocurrencies. Now, coupled with the fact that people are reluctant to exchange cash due to the increasing risks of catching COVID-19, touchless transactions are gaining more traction throughout the UK.
The degree of how popular cashless payments will become in the UK remains to be seen. However, the fact that cashless payment businesses are expanding operations during a major recession is indeed telling. Additionally, some UK-investing advisors are advocating clients to purchase stock in publicly-owned cashless payment fintech companies, which will further buttress their popularity.