A new report has concluded that with the recent steep fall in the use of cash, particularly by young people, the government and regulators need to step in to ensure that cash remains a viable method of payment in the future.
The ‘Independent’ Research
The independent research called ‘Access to Cash Review’ was authored by Natalie Ceeney (a former financial ombudsman) and financed by cash machine network operator Link and used evidence from nearly 100 businesses and charities in the UK to reach its conclusions.
What’s The Problem?
The use of cash has been in decline while the use of cards (particularly contactless) has experienced a huge boost, particularly among the young. For example, for the first time, debit card use, driven by contactless payments, overtook the number of payment transactions made in cash in the UK back in 2017.
Also, the Access To Cash research has concluded that at its current rate of decline, cash use would end by as soon as 2026, although notes and coins may still be used in 15 years’ time, but only for an estimated 10% and 15% of transactions.
The declining use of cash has also forced the removal of many ATMs, and a move to online and mobile banking has contributed to the closure of many bank branches.
All these factors have put pressure on the whole cash system and have threatened to drive cash out of popular use within 10 years.
Benefits Of Cashless
In UK cities such as London and Manchester, there are already cashless cafés and pubs e.g. the Crown and Anchor pub in South London which, in October, switched to fully cashless with customers only able to use debit cards, credit cards and contactless payments including Android Pay and Apple Pay.
There are several key benefits for business that choose to go cashless including:
There are some drawbacks to going cashless, which include:
Ideas to help save the use of cash as a viable system include:
What Does This Mean For Your Business?
This latest research supports the findings of other research which shows cash use to be in decline and being overtaken by debit card and contactless in most lower value daily transactions. Cashless and particularly contactless can be very convenient, fast, and beneficial for customers, businesses and banks alike when it comes to purchases of £30 and under and hence it can favour supermarkets, shops, bars and other retail and convenience outlets.
This new research appears to be making the point that the cash system could become a non-viable system much more quickly than many of us may have thought, and that work needs to be done now in order to prop it up and prolong its life. Poorer and more disadvantaged and challenged members of society, of which there are many, need to use cash and may simply not have a bank account and a card with contactless/cashless payments enabled, and therefore, may find themselves being discriminated against, and facing real practical difficulties if the cash system were to collapse. Some businesses and events that deal in cash may also find it challenging and costly to convert to a cashless situation.
Cashless transactions look likely to increase in the UK, and many retail businesses may soon find themselves seriously considering whether a switch to cashless could be workable and beneficial. The likely introduction of biometric ‘fingerprint’ bank cards which allow individual transactions of more than £30 may also make a wider range of businesses see cashless as a real possibility.