Digital wallets vs contactless cards vs cash

Businesses can accept payments – and are expected to accept payments – in more ways than ever.

Today, contactless and digital tech has led to the rise of multiple forms of payment.

Three options stand out above the rest: Digital wallets, contactless card payments and traditional cash.

If you run a business, there’s no doubt you’ll be familiar with one, or all, of these.

But which payment method is most ideal? Which serves the greatest purpose in 2023 heading into the future? And which is likely to fall by the wayside?


Despite becoming much less popular among customers – especially since 2020 – there are still plenty of consumers (particularly older customers) who still rely on cash.

And although it’s not advisable for businesses to continue running on a “cash only” basis, if customers are still expecting to use notes and coins, then businesses should allow them to do so.

Advantages of physical cash

It’s still widely used

You can still walk into most stores in most modern countries the world over and use physical cash.

Meaning businesses still have plenty to gain in accepting cash payments, rather than doing away with them.

Some businesses opted to switch to a cashless system in the wake of the COVID pandemic.

And while a few have gone card only, most have returned to accepting card and cash.

And there’s plenty of cash still floating around out there. The current global supply of M1 currency (physical currency of any kind) holds a value of $48.9 trillion as of November 2022, according to Visual Capitalist.

So don’t feel like you need to abandon traditional cash entirely, even if other forms of payment are nipping at its heels.

If you own a physical store, chances are a lot of your customer base will still be paying with cash, even if that number has declined.

Cash is a good backup

Contactless payments are highly reliable but the signals needed to create a wireless connection might not always be reliable.

In these circumstances accepting cash can be a good backup option.

Customers have fewer security concerns

Around 20% of customers are nervous about contactless payments because of security fears.

Mostly this comes from not understanding the measures taken to protect card payments, or still believing many of myths about contactless payments that emerged when the technology was first introduced.

In reality, contactless payments are incredibly safe for customers and businesses alike.

The disadvantages of physical cash

It can be faked

Even though counterfeit cash is not as big of a talking point as it used to be, thanks to improvements in fake note detection, it’s still possible for a few fakes to slip through the cracks and for you to mistakenly accept this “cash” in your business.

Fake bank notes totalling a value of £4.4 million were removed from circulation in 2022, according to the Bank of England, so the threat is still out there.

Hygiene issues

The coronavirus pandemic highlighted some worrying issues surrounding general hygiene and the rate at which germs can spread. Which is why a lot of businesses chose to switch to cashless options, if only temporarily.

When handling physical cash, the risk of passing germs between people is highly increased when compared to contactless alternatives.

Even if you keep a bottle of hand sanitiser beside your cash register, you’re still more at risk of catching a bug, or something worse, from handling cash than you would in a contactless transaction.

Physical cash can be lost or stolen

Digital cash has the benefit of being easy to keep an eye on. Logging onto your online banking to check your business balance will tell you everything you need to know.

Physical cash, on the other hand, has the potential to be misplaced or stolen.

Cash involves a lot of administration

When you finish work after a busy day, the last thing you’ll want is to spend another few hours counting cash and matching it to the till receipts (assuming it even matches first time).

But it’s something you have to do.

With contactless payments you have an automatic record of every trasaction you’ve taken.

Contactless cards

Contactless cards were introduced in the UK in 2007.

They now account for over 25% of all payments in the UK.

Even small business owners with single corner shops, independent contractors and mobile businesses can – and do – accept contactless payments.

And with 83% of the UK population using contactless payments, according to the same report from UK Finance, it’s clear plenty of people prefer using contactless as their payment method of choice. 

If you run a business, here are a few reasons why you should accept contactless.

The advantages of contactless cards

Accept payments quickly

The quicker you can accept payments from customers, the higher your chances of earning increased revenue as a result.

Contactless cards and contactless card machines allow your customers to make purchases with a simple tap.

Contactless payments take less than a second to go through, according to Lloyds Bank. You need only add a few extra seconds for the time it takes the customer to head to your payment terminal and remove their card from their wallet or purse.

It’s a huge cut in time over the old chip-and-pin method.

Plus, this level of convenience has become the standard for most establishments, with 86% of businesses favouring contactless payments over physical cash, according to Elite Business Magazine.

Speaking of which…

It’s the preferred payment option for millions

Both businesses and consumers seem to favour contactless card transactions.

Almost 70% of debit card transactions in December 2021 were contactless, according to UK Finance. This number will only have increased since.

So if you want to keep up with the needs of the modern consumer, it makes all the sense in the world to accept contactless payments in your business.

It’s easy to track payments

Contactless payments work just the same as any other card payment, leaving a digital paper trail through the bank accounts in question.

This makes it incredibly easy to monitor your business income via cards, whereas physical cash needs to be counted precisely at the end of every week.

If you ever need to question a payment, or if there’s ever an issue with a customer’s purchase, it’s simple enough to look back through your business’s digital accounts and find the precise payment you need to investigate.

This process would be pretty difficult if the customer paid in cash, and you’d likely need to rely on the physical receipt you gave them, if you gave them one at all.

Contactless payments, like other card payments, make things even easier when tax season rolls around, too.

With all your card payments conveniently listed in your bank account, some simple maths will help you come to the figures you need.

The disadvantages of contactless cards

They can be limited by technical difficulties

As discussed above, contactless payments rely on internet and digital technology to go through.

If there’s ever a problem with these technologies, customers wanting to pay by card may struggle.

However, there are solutions to this. If the problem is with the network, card payments can still be accepted via contactless terminals.

Rather than the transaction going through straight away, as with most transactions, it will remain pending in the system until the card reader eventually gets back online. 

Once a connection is restored, the merchant provider will allow the transaction to go through. So it’s not the end of the world if your business bumps into some connectivity problems.

Businesses need stringent security measures in place

The Payment Card Industry Data Security Standard (PCI DSS) was created to ensure businesses follow strict security measures when dealing with customer card data.

Any businesses that accept card payments need to follow PCI DSS as a legal requirement. Otherwise, they could face serious consequences including fines.

The data that are collected during a contactless payment is the same as any other card payment, meaning it must be treated with the same level of respect and security.

However, if your business has been accepting card payments for a long time, chances are you’re already PCI DSS compliant, and you’ll be following all the necessary rules to protect customer data that are gathered as a result of contactless payments.

Just be sure to stay on top of all PCI DSS requirements, updating your systems where necessary.

If you need any more information on PCI DSS, you can find all the info you’ll need here.

Digital wallets

Digital wallets allow consumers to store their card data on an app, which effectively turns their mobile phone, smartwatch, or similar smart device, into a contactless card.

Apps like mobile banking applications, Apple Pay and Google Pay have caused a seismic shift in the way people make purchases in-store.

This has made contactless payments even more convenient – users no longer need to remove a card from their purse or wallet and put it back.

They simply need to grab their phone from their pocket, bring up their digital wallet, and tap the device. 

Given that a lot of people seem to have their phones in their hands constantly nowadays, this payment method is quickly gathering steam.

Here are a few reasons why you should adopt digital wallet payments in your business.

The advantages of digital wallet payments

They’re increasingly popular

The ease at which digital wallet payments can be made via a smart device is leading more and more users to prefer these payments over other options.

The total number of unique contactless mobile payment users will reach 1 billion globally by 2024, rising from 782 million in 2022, representing a growth of 60%, according to Juniper Research.

If figures like these are to be believed, payments via digital wallets are set to become a superpower in the payment industry.

Something businesses should be getting on board with if they hope to satisfy an ever-growing number of digital wallet users.

They’re likely going to be one of the biggest payment methods in the future

We know digital wallet payments are on the rise today. But this trend is one many predict to continue exploding in the near future.

$140 trillion worth of transactions will be made by mobile wallets by 2030, effectively wiping out the need for cash, and transforming us into a virtually cashless society, according to GlobalData.

We’ll understand more about the impact digital wallet payments will have as the years roll on. But expect to see a continuing upward trend.

They could replace contactless cards one day

Contactless cards might have been the tool that started the contactless revolution. But all tools are eventually replaced with more convenient, more efficient ones.

Contactless cards may be replaced by smart devices featuring digital wallets in the coming years.

In a piece featured on, tech business CEO Vinay Kalantri said:

“With the higher security and verification procedure, wider payment options, and better rewards there will eventually be a shift to digital credit cards in the future but for now, physical and virtual cards will coexist.”

How long this shift will take remains to be seen. But the convenience offered by digital wallet payments on smart devices will likely lead to an increase in spending, akin to the spending we have seen with contactless cards over the past few years.

The disadvantages of digital wallet payments 

Potential signal issues

Similarly to some contactless payments, some establishments may struggle to complete payments if there are problems with the network.

However, not all digital wallets require an internet connection to make payments, the same way not all card readers require an internet connection to accept them. In the short term, anyway.

Some digital wallets, like Samsung Wallet, emit a magnetic signal from a smartphone (similar to the signal sent from your credit card) which can be accepted and stored by points of sale, until the network returns to normal and the transaction can be fully processed by the merchant provider.

Which payment methods should you focus on?

If all of the above has outlined anything, it’s that traditional cash payments are suffering a slow death, while digital payments like contactless cards and digital wallets are flourishing.

Should your business still accept cash payments? Absolutely. There’s still plenty to be made from customers who prefer to handle physical money. They’re just becoming the minority.

The future is clearly contactless, with digital wallet payments set to overhaul the competition in the years and decades to come.

So if you were wondering where to focus your efforts moving forward, start here, and get on board with the tech sooner than later.

Written by Frederick Jace

A passionate Blogger and a Full time Tech writer. SEO and Content Writer Expert since 2015.

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