The future of cash
Is the future of money destined to be digital? In 2016, 2.9 million people in the UK recorded that over the previous month they had used no notes or coins, or only used them only once. In 2018, this figure had risen to 5.4 million. Yet by 2021, a staggering 23.1 million of us reported that we were hardly using cash.
There is no doubt that COVID was a key driver for this rapid increase. During the pandemic many retailers required cashless payments, and the decreased demand for cash was exacerbated by people avoiding cash for fear that it may spread infection. This is borne out by the 38% decline in cashpoint use in 2020.
Yet COVID only accelerated a trend that has been taking effect for years. In 2010, 50% of all payments in the UK were made in cash, by 2020, this number had fallen to 17%. Experts predict that within the next decade just one in ten transactions will be completed with notes and coins. It seems that many British people prefer the speed and convenience of digital payments.
But digital does not work for everyone. A survey last year by Link, the UK's largest cash machine network, found that 10 million British people would struggle to live without cash. This number includes older people who may not have access or confidence to use the internet and those living in rural communities, for whom internet connectivity may cause problems.
What’s more, cash seems to be having something of a resurgence in popularity. The Post Office recorded that it handled a record £801m in personal cash withdrawals during July 2022, an increase of 20% on the year before. Some commentators believe the cost-of-living crisis is a large contributing factor as people find it easier to budget and manage household finances when using cash.
A Bank of England survey revealed that even those people who do not use cash on a day-to-day basis find it a valuable form of money, with just 35% of respondents believing they could go a whole month without using it. It is considered an important back up option, with 85% of respondents revealing that they carried cash in case the technology didn’t work or a card was not accepted.
It therefore seems that cash will not completely disappear as a payment method in the fast-changing technological landscape. For a small but significant proportion of the population, cash remains vital, for different reasons. However, for the country as a whole, it seems likely that cash will play a less important role in the future.
