The government should work with technology companies to allow charities free or discounted access to contactless payment technology, the Charity Finance Group has said.
In its submission to a government call for evidence on cash and digital payments in the new economy, the CFG says that charities are lagging behind in adapting to contactless technology, with 74 per cent having not yet attempted to take contactless donations, according to an Institute of Fundraising survey published on Tuesday.
The call for evidence, which was announced in this year’s Spring Statement and closed earlier this week, covered the transition from a cash economy to a digital one and included the eye-catching proposal to remove 1p and 2p coins from circulation.
According to the Charities Aid Foundation, "loose change" accounts for £320m in donations to charities each year and remains the most popular form of giving despite the rise of online and direct-debit donations.
In its submission to the call for evidence, the CFG says that almost three-quarters of charities plan to introduce contactless technology to modernise how they accept donations from the public, but "this will not happen unless they are given support and barriers to usage are removed".
Given that 57 per cent of charities said the cost of contactless technology was the main reason why they had not adopted this method of donating, the government should act to make it more affordable for the sector, the submission says.
The CFG’s submission says there needs to be a "suitably long transition period" between a cash economy and a digital economy, but it accepts that 75 per cent of people have noticed a decline in cash giving among 16 to 24-year-olds.
The transition period would allow charities to accept donations from younger age groups more used to contactless technology, while not losing income from older donors, the submission says.
Small charities are also more likely to rely on cash donations, the submission says, and 72 per cent of charities believe that removing 1p and 2p coins from circulation would make people more unlikely to donate to bucket collections or collection boxes.
The Gift Aid Small Donations Scheme threshold should also be increased from £20 to £30, in line with the limit on contactless payments, the submission says.