Putting a nail in the cashless society advocate’s coffin

Now, don’t get me wrong, I am a fan of all payment methods - I believe there is a place in society for each of them. I am particularly enamoured with my contactless card, and get annoyed when I’ve already put my card into the POS terminal before realising I could have just tapped the screen. And mobile payments make my life easier, whether making in-store transactions or ordering last minute gifts on my phone. However, a few well-covered news stories about cash recently got me thinking…

Results of a survey by Lloyds Bank report that 40 per cent of UK consumers say they won’t use cash in 10 years. Couple this with the news from Equifax and Gorkana Surveys that a quarter of people in the UK believe they will have a cashless society within the same time period and anyone would think that cash has little to no place in modern society. But are these predictions justified?

Just the other week, the Bank of England announced that £20 paper notes will be replaced by polymer notes in 2020, following the same destiny of £5 and £10 notes, which are due to be circulated between 2016 and 2017 respectively. If cash is really on its way out, why is the Bank of England investing a reported £230m in more secure, durable plastic £20 bank notes that should last a lot longer than the few years that they are supposedly only required for? And this doesn’t even include the cost the rest of the UK faces: upgrading ATMs, vending machines and other equipment, as well as staff training, etc. The new polymer notes have been reported as saving the Bank of England £10 million on printing a year… by that count, they are saying that it will be a minimum of 23 years before cash is no longer needed (by their own investment).

Let’s be honest, cash is not on its way out. Not in the foreseeable future anyway. Whilst it’s true that electronic payments surpassed cash transactions in 2014, and there are numerous reports that state contactless cards are revolutionising the way people make payments in the UK, cash is still very much in use. Not only were 18 billion cash payments with a total value of £250 billion made in the UK last year, the chief cashier and director of notes for the Bank of England confirmed at a recent conference that there are nearly three and a half billion bank notes in circulation today, totalling over £60 billion. This does not sound like the beginnings of a cashless society to me.

Having recently required the expertise of a physiotherapist, I was however surprised to see that electronic payments were not even offered as an option. The only payment methods accepted were cash and, dare I say it, cheque (ahem!). Whilst this surprised me, it is not a rare occurrence. There are many instances in everyday life where consumers in the UK have to pay with cash, from paying for takeaways and driving lessons to bars at wedding venues and the local window cleaner, and until this changes there will always be a need for cash.

So, to that 40% of UK consumers that won’t use cash in 10 years’ time I would say: don’t get swept away with hype of contactless cards and mobile payments. Yes, the use of cash is in decline, and sure, cashless transactions are on the rise, however, when envisaging a cashless society remember the story of the humble cheque. Whilst the cheque has seen a huge 84% decrease in use since 1990 and talk of its death has circulated for just as long, they are still being used. The decline of any payment method that has been ingrained in society for so long (since 1696 for cash) does not happen overnight, it doesn’t even happen in 25 years, so why would the death of cash be any different?

I’m not saying that other payment methods won’t overtake cash in terms of popularity, but just look at the level of investment the Bank of England is making to ensure the circulation of long-lasting plastic bank notes – if cash really is on its way out, there would be no need for it. I’m sure it’s clear that I am not part of the 40%. I do not believe that a cashless society is just round the corner and whilst I will continue to use my contactless card or mobile phone to make payments, I certainly will not be leaving my house anytime soon without cash in my purse (or at least without knowing where the nearest ATM is...)