Is coronavirus the end for cash?
Dosh, Readies, Bread, Dough, Coin, Moolah, Spondoolies, Wonga or even just plain simple cash, no matter what you choose to call it I think we can all agree that for many, many years cash has always been king.
But in recent years the use of cash has steadily declined and now, according to the latest UK Payment Markets Report from trade body UK Finance, people are turning their back on cash preferring to use debit cards and contactless instead.
The latest figures show that less than a quarter, just 23%, of all payments last year were made by cash. In 2014 it was 48%, so it is a big change in just 5 years but as last year UK Finance also predicted that cash would make up just 9% of all transactions by 2028 it is not a totally unexpected event.
What has been a totally unexpected event is coronavirus and with it a growing preference for contactless payments. Contactless usage has boomed during the pandemic as businesses and consumers began rejecting cash payments over fears that cash is a dirtier way of paying and could help spread the virus.
It is worth noting though, as of writing, the WHO has made it clear that handling coins and notes does not pose any more of a risk than touching other surfaces including cards, pin pads and phones.
Debit cards and of course contactless do of course offer a level of convenience for both customers and business owners, especially as the contactless limit was raised to £45 in April. According to Which?, a third of all the UK's bank branches have closed since 2015 with many more earmarked for closure, making it much harder for a business to bank their cash takings and making taking card payments far more attractive.
Although the decline in the use of cash has been expected, there are growing fears that coronavirus could speed up the decline of cash in the UK as people’s fears about the health risks of cash continue after the pandemic.
Natalie Ceeney, who chaired last year's Access to Cash review, which found that the UK could become 'virtually cashless' by 2035, commenting on the findings said: 'This UK Finance data was taken before the impact of coronavirus, which has accelerated the shift to digital payments and further challenged the viability of the cash infrastructure. It's essential that we ensure that everyone is included in our economy, and until digital payments work for everyone, we need to maintain people's ability to access and pay with cash.'
The figures produced by Finance UK highlight that an estimated 2.1 million people still mainly used cash, a figure down just 600,000 people from 2016.
Cash machine withdrawals have dramatically fallen during Britain's coronavirus lockdown, although as people were stuck at home this was to be expected, but fears over the negative association towards cash has led one of Britain's largest ATM providers NoteMachine to launch a 'Cash is Safest' campaign aimed at the public and retailers, with its chief executive Peter McNamara telling us the idea cash was a dirtier payment method was 'the greatest piece of fake news floating around at the moment.'
John Howells, chief executive of Link, Britain's cash machine network, has also called for legislation to maintain cash for 'as long as it is needed.'
He said: 'Less than ten years ago, cash was used for more than half all of payments. Yet, over the past five months we have seen reductions in ATM volumes that were expected over five years - we think it could be as low as one in 10 payments now.
'During the lockdown we have seen a large drop in ATM volumes, down by 55% and while these numbers have begun to come back up Link research shows because of coronavirus, 54% of consumers say they will use cards more and 38% said they will do more shopping online and 33% said they will use ATMs less.
'Link therefore does not expect all of this decline in cash use to be reversed and that is putting a huge strain on the sustainability of the cash system. There is still almost £1.5 billion being withdrawn from ATMs a week and millions of people aren't yet ready to go cashless.’
Age UK has also warned the financial watchdog that the UK's 'headlong rush towards a cashless society' will be catastrophic for the most vulnerable as the charity reports a rapid increase in the number of older customers who say they have exhausted their cash supplies in the pandemic and fear they could soon run out of food and other essentials.
Many businesses are also expected to make the decision to move away from using cash as they emerge from lockdown as research conducted for Money Mail by Amaiz suggests 50% of small businesses have gone cashless or plan to do so because of the pandemic.
Major supermarkets, including Tesco and Sainsbury's, have been actively encouraging customers to not pay with cash since the pandemic began in March and when B&Q re-opened its stores recently, in an effort to reduce contact between staff and customers, they were only allowing purchases paid for by card or using contactless.
The Government’s response to the decision has been non-committal in many ways, although draft Government guidance to business has stated that retailers should accept only cards or contactless payments while the coronavirus is still a threat.
Today we simply have more choices than ever in how we choose to pay for things and the likelihood is that there will be even more new payment systems and new currencies such as Bitcoin. However, it is unlikely we will see cash die out in the near future as people will continue to demand access to it.