The future of cash
We are no longer using cash to pay for things like we used to. In 2008, cash accounted for 60% of payments, but last year cash use had more than halved to just 28%. Experts predict that within the next decade just one in ten transactions will be completed with notes and coins.
This is borne out by the sharp decline in the use of cashpoints: in 2016, there were 2.7bn withdrawals from Britain’s 70,000 cash machines – the lowest number of transactions since 2010.
It’s not that we’re buying less. Over 34 billion transactions were made in the UK by consumers last year, according to the UK Payments Market Report. Debit cards were the most popular way to pay, accounting for 15 billion of those payments. The report predicts this trend will continue and that half of all payments will be made by debit card, including contactless payments, by 2024.
It seems that for many people, cash just cannot compete with the speed and convenience of a debit card. But that’s not to say there is no future for cash: a major report last year* predicted that more than 8 million UK adults would struggle to cope in a completely cashless society.
There are advantages to using cash:
• It’s accepted virtually everywhere
• It’s not reliant on technology
• You may spend less. Behavioral economists talk about the “pain of paying” — because human beings are loss averse, spending money is painful. Paying with plastic delays that pain and so we’re likely to spend more, but with cash, the pain of parting with money is felt immediately
• You may enjoy your purchases more. If you’ve experienced the ‘pain of paying’ you will assign more value to the purchase and enjoy it more, according to research published in the Journal of Marketing Research.
Will cash disappear as a payment method in the fast-changing technological landscape? Banking trade body UK Finance doesn’t think so. It’s predicting that cash is here to stay, but that it will play a less important role in the future.