The Access to Cash Review confirmed back in February that the UK was at a tipping point, predicting that we could be ‘virtually cashless’ by 2035, with ‘fewer than one in ten payments set to involve physical money by the end of the decade’.
Since then, as the country has endured months of lockdown, the coronavirus pandemic looks set to hasten the review’s predictions.
As more of us move online to shop and bank, the contactless payment limit increased to £45 in April in a bid to prevent ‘unnecessary’ cash transactions and their perceived increased risk of spreading the virus, many are asking whether the pandemic could spell the end for cash?
Who is still using cash?
The prevailing opinion is that the older generation, growing up with cash, are remaining loyal to it. Indeed, Age UK wrote an open letter to the Financial Conduct Authority (FCA) this month, expressing their deep concern ‘that our headlong rush towards a cashless society is leaving some older people unable to pay their way.’
The charity has asked the FCA to help older and vulnerable customers who are struggling to get cash as the lockdown continues, saying that ‘we are now approaching a critical time in the crisis…for older people.’
Access to cash for the elderly is clearly an issue of great importance and access to cash for those who still rely on it is crucial.
Meanwhile, the Halifax recently told the Guardian that ‘the numbers of over-65s signing up for online banking has jumped by 63% [since the lockdown began], and their use of contactless has also soared’.
Banks and building societies have rallied during the crisis, the report going on to confirm that those holding a Post Office card account who are deemed vulnerable, can have cash delivered to their door and that ‘can be as much as £2,500. NatWest, Barclays, and Tesco Bank will also deliver to your door if you are a vulnerable customer.’
The rise of cashless payments
For the young, the decision has seemingly already been made. Millennials have grown up with internet banking and PayPal and – being digitally savvy – have moved seamlessly to contactless payments and even paying via their mobile phones.
But what of those following in the wake of the millennial generation?
The Money Pages reported last year that Generation Y – those born between 1997 and 2012 – would be the first generation of so-called ‘cashless natives.’
The report quoted generational expert Dr Eliza Filby, who said: “Although they are going to be the first cashless generation, it’s wrong to assume that because they don’t use cash they’re not as educated, informed or conscious when they spend. This is a much more sophisticated use of money that wasn’t available to millennials.”
Recently, the coronavirus has done much to speed up the predicted move to a cashless society.
Supermarkets have been advocating the use of card and contactless payments since the crisis began, a bid to protect its workers and prevent the spread of the disease through contact with contaminated cash.
More recently, the Telegraph reported that more retailers are moving to discourage – or temporarily ban – cash payments: ‘High street retailer Ted Baker said that it was doing just that in an email to customers on Friday’ whilst stallholders in London’s Borough Market have erected signs insisting, they’re only accepting contactless payments.
Costa Coffee has recently done likewise.
What does the Bank of England say?
Despite the rise of other forms of payment, the Bank of England continues to champion the use of cash.
In fact, as shops have moved to cashless transactions across the UK, the Bank of England has joined the World Health Organization in stressing that the coronavirus risk posed by cash transactions is no greater than the risk of contamination via any other handled items, repeating advice on regular hand washing.
In an article entitled Will Cash Die Out? the Bank of England points to the ‘over 70 billion pounds worth of notes in circulation’ and lists its reasons why we might still prefer to use cash:
- It is fast and convenient
- It is very widely accepted
- It is helpful for budget management
They also point to the 300-year history of banknotes, pointing to the five-pound note that entered circulation in September 2016 and the first to be printed on a thin, flexible plastic polymer, as a sign of future innovation.
The future of cash
The death of cash has been predicted for many years, but it might be coming true sooner than we thought.
With Generation Y described as ‘cashless natives’ in the same way that they are ‘digital natives’ the future for cash is sure to look very different to how it must have looked when the Bank of England issued its first banknotes three centuries ago.
And then there’s the impact of the coronavirus crisis. As we all look to keep ourselves safe and to limit its spread, retailers and consumers are turning increasingly to digital payment solutions.
Whether we all return to cash afterwards or whether the length of the lockdown and the gradual returning to normality is sufficient to see cashless habits form remains to be seen.