Are we ready for a cashless UK? The technology is certainly in place to facilitate a cashless environment but it comes at a price.
The use of cash has fallen rapidly in recent years, as alternative ways to pay such as contactless payments and biometrics have seen a rapid growth in popularity.
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Ten years ago, six out of every ten transactions were cash. Today it’s three in ten. According to a report from Access to Cash, the UK runs the risk of leaving millions behind if it pursues a cashless society in the near future.
The report notes that banknotes and coins are a necessity for eight million people across the UK. While most of UK society recognises the benefits of digital payments, it is still inaccessible to many vulnerable consumers.
Even Sweden, which is the most cashless society in the world has outlined the risks of falling into a cashless society too soon. Millions of people will be left behind and face increased risks of financial isolation and rising debt.
It’s clear to see why people are moving towards cashless technology; it’s easy, convenient and very quick. There are certain shock events that could potentially slow the shift to digital, such as IT failures which have plagued UK high street banks this year. None the less, the majority of industries are moving the UK away from cash.
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By GlobalDataAuthor of the report, Natalie Ceeney, said: “Our research does show that if we fail to plan and prepare for it properly, a cashless society would do significant harm to the millions of people who would be left behind.”
The forces driving cash out
The shift away from cash in the UK is irrefutable. Consumers are using cash far less often.
The number of cash withdrawals from ATMs is 8% lower now than a year ago, and the rate of decline has increased from 5% at the beginning of 2018.
New payments technology is making financial tasks far easier. Many believe that we will inevitably become a cashless society (41%). However there are many that state they would struggle to continue without access to cash.
Research by UK Finance showed that those who are most reliant on cash are the poor. Unsurprisingly, the younger generations are most likely to be early digital adopters, and the old are slower to take up new technology.
Access to Cash also noted that there are significant variations in attitudes depending on location across the UK. For those living in areas with bad mobile or broadband connectivity, such as rural parts of Scotland, cash is essential.
Reasons for sticking with cash include:
- Having more choice (34%)
- Privacy (6%)
- Peace of mind that cash will always work (55%)
However for 25 million people (47%) cash is not a choice, but a necessity. There are around 1.3 million people who don’t have access to a bank account.
The potential consequences of a cashless UK could be:
- Loss of independence for many, particularly the old and disabled.
- Exploitation and abuse for the vulnerable, as digital can lead to
a loss of control. - The loss of viability of rural communities as shop costs rise and
the local cash economy starts to disappear.
It’s obvious that there are many benefits to using cashless technology. It is safe, it’s far quicker and consumers can access anything they want if they have a digital way to pay.
However, leaving 8 million people behind in a vulnerable financial state would be catastrophic. As cash use will continue to decline, it is essential to create a sustainable cash infrastructure that will protect those who still rely on cash.
