Digital wallets have transformed the way we handle money. According to the latest LINK report, Tapping into Trouble? The UK’s Growing Digital Payment Dependency, only 7% of people carry cash, and more than half have abandoned traditional wallets altogether. This shift towards digital is undeniable, but it presents challenges.

While digital payments offer unparalleled convenience, they also introduce new risks. Power outages, cyber-attacks, and system failures can disrupt transactions, leaving businesses vulnerable. The LINK report highlights that two-thirds of people have experienced payment disruptions, emphasising the need for reliable backup systems.

Despite the digital trend, physical payment methods remain essential. Over-45s still prefer physical debit cards, while younger generations are comfortable with digital wallets.

As consumers, many of you know that keeping a small cash reserve and physical cards can safeguard against system failures. But for businesses, it can be all too easy to rely too heavily on digital – especially when so many adults now use digital payments and mobile wallets: 57% of UK adults now use mobile wallets such as Apple Pay and Google Pay, according to UK Finance – a steep rise from 42% the previous year.

But let’s not forget: in 2024, people withdrew about £80bn from cashpoint machines –roughly £1,250 per UK adult. Why? Because cash still works.

Digital payments are not universally accessible. Nearly a quarter of people feel digitally excluded and telling customers to "just use your phone" is not a solution. Ensuring digital inclusion while maintaining access to cash is vital for financial resilience.

Finance directors and CFOs should prioritise combining financial oversight, operational resilience, user experience and cybersecurity awareness to mitigate risks associated with digital payments platforms.

• System reliability: Evaluate uptime and failure rates of payment platforms.

• Contingency planning: Assess backup systems for outages (e.g., offline payment modes, alternative providers).

• Vendor risk: Review SLAs and risk exposure from third-party payment processors.

Key takeaway: Conduct regular business continuity drills involving payment disruptions

• Threat landscape: Monitor for phishing, data breaches, and payment fraud trends. 
• Authentication and encryption: Ensure strong security protocols such as tokenisation and two factor authentication (2FA).
• Incident response: Review how quickly and effectively your team can respond to breaches.

• Accessibility: Ensure payment methods are inclusive and user-friendly. 
• Trust and transparency: Monitor customer sentiment around payment security and reliability. 
• Fallback options: Provide alternatives when digital fails, such as cash and card terminals.
  

Key takeaway: Use customer feedback and payment data to identify risks.

The shift towards digital wallets is reshaping the financial landscape. While today’s technologies become more reliable and secure, emerging technologies such as Pay by Bank, powered by Open Banking, are poised to further disrupt the status quo.

As a finance director or CFO, it's important to balance the convenience of digital payments with the reliability of physical methods – and that starts with ensuring your organisation remains resilient in the face of technological disruptions and threats.

To learn more about the future of payments, visit our Payments Hub or speak with your NatWest representative.