TO THE amusement of my children, my husband frequently refers to me as ‘her majesty’ This association has nothing to do with my regal disposition… rather everything to do with my not carrying cash, or indeed any means of payment whatsoever. Of course, the Queen can afford not to have cash on her as she has an army of courtiers who step in whenever the need arises. For the rest of us, we may not have courtiers or a patient other half, however in today’s digital age where cash use has fallen dramatically, we don’t need one. Today’s modern equivalent of a courtier is a smartphone.
Technology has completely transformed the way that we use money. In 2017 debit cards overtook cash to become the number one retail payment method in the UK, with many of these payments being contactless. As the amount of currency that any of us has on our person at any one time has dwindled, are we fast on our way to becoming a cashless society?
Yes, we are. According to the British Retail Consortium the current rate of decline in cash usage would mean cash use would end in 2026. However, it concluded that notes and coins would still be used in 15 years’ time but accounting for between 10% and 15% of transactions.
How have we gotten to the current situation so quickly? And what are the real implications?
A cashless society has been a talking point for futurists for years, but for one reason or another, has never quite been within grasp. The arrival of chip-and-pin cards in 2003, followed by contactless payment in 2007, has made it possible for cashless payments on everything from tolls to tea. Futurists (and many governments) are salivating. Even the Church of England has got on board. Church chiefs introduced hand-held card machines in lieu of the collection plate scheme after collections were hit by fewer people carrying cash with them.
It is not hard to see why many businesses favour cashless transactions. For many retailers, it would render the daily trip to the bank obsolete, it would end the problems of thieves and vandals breaking into coin operated machinery. From a government’s perspective, the end of cash would put a stop to ‘cash in hand’ tax avoidance.
From the banks’ perspective its heads we win, tails we win. Britain’s cash infrastructure costs around £5bn a year to run. Going cashless would represent a significant cost saving for banks. What is more, every time you swipe your contactless card or punch in your chip-and-pin number, you will be paying the card provider/and or banks for the privilege.
Lest we forget the germaphobes, not having to handle cash and any associated harmful bacteria is surely another positive.
With so much upside, should I care if cash disappears?
Returning from a ski trip to Sweden in January, I found myself in an unfamiliar situation of having leftover cash (krona) in my pocket. Krona which, despite my best efforts, I was unable to spend while on holiday. This was not from lack of effort; rather local retailers would not accept cash. Although this was inconvenient for me, it did not pose anywhere near the level of stress and anxiety that a cashless society could impose on the more vulnerable in our communities. The Access to Cash study author, Natalie Ceeney, says the ‘UK risks sleepwalking into becoming a cashless society’. Her study notes that banknotes and coins are a necessity for eight million people. These include rural communities where alternative ways of paying are affected by poor broadband or mobile connectivity, and many people who have physical or mental health problems consequently find it hard to use digital services. The report also concludes that vulnerability in this area is generally the result of income, not old age.
There is also the risk of increased debt; the more removed you are from the physicality of the money you spend, the more likely you are to spend thoughtlessly or indeed overspend.
What about in an emergency? If a natural disaster strikes, for example, cash may be the only way to purchase the things you need whilst the power is down.
There is also the increasing problem of consumers’ vulnerability to failures in technology – most notably last June when services from Visa, American Express and Mastercard went down with technical issues and customers were unable to make some payments for several hours. This highlights the risk of relying on a single form of technology – the demise of cash will leave us very much at the mercy of technology.
While there is no doubting the advances we have made since Marco Polo introduced the concept of paper money in Europe way back in the 13th century, there are benefits of cash that other payment methods simply cannot duplicate. The demise of cash should not go unchecked.