Notes Of Importance: Why Cash Remains Integral To UK Society

14 April 2020

With the rise of card and contactless payments, many fear that the end is nigh for cash. Indeed, some countries, such as Sweden may soon become cashless, as their cash circulation has dropped by 27.5% in the last four years and ATM withdrawals have dropped by 50%. But, what of the UK? While it is predicted that by 2024, debit card payments will account for half of all payments in the UK, Volumatic asks, does this mean cash is now redundant?

Cash In The UK

A recent study has found that 97% of Brits carry cash on them, and 80% of the UK population still rely on cash for their everyday payments, from buying lunch to transport tickets and paying tradespeople such as window cleaners. Furthermore, two-thirds of people use notes and coins to pay for low-cost items such as greeting cards, newspapers and magazines and daily groceries.

While debit card use is increasing, cash remains a necessary form of payment. So much so that the average person carries £41 with them, while 85% of Brits keep some cash at home too.

So, what do people use cash for?

The top five uses for cash include;

  • 94% offer cash to homeless people or buskers
  • 87% use coins and notes to give their children pocket money
  • 86% pay for newspapers with cash
  • 85% use cash to pay for home services
  • 85% pay their taxi fare with cash.

Cash For UK Businesses

In the UK, the cash infrastructure continues to flourish and is worth £5 billion a year. For some businesses, cash is still the only form of payment they accept, and, in many cases, it remains the preferred payment option for many people. Across the UK, over three million small businesses do not accept card transactions. Similarly, 40% of microbusinesses stick purely to cash payments.

While it may be a source of frustration for the few that do not carry cash on them, there is a multitude of benefits that show why notes and coins are still an essential form of payment. For businesses and consumers, cash is still king.

Here are just some of the reasons why cash is still an essential part of UK finances.

Seven Reasons Why Cash Is Here To Stay

1. Cost Of Processing

For businesses, the cost of processing payment can be a critical factor in deciding which payment options to offer to their customers. Cash is still the cheapest payment option to process. On average, a cash payment costs 0.15% of the transaction value to process. Debit card payments cost 0.22% of the transaction value while processing a credit card payment costs 0.79% of the transaction.

2. Budgeting

Many debt advice charities encourage consumers only to use cash and to resist the temptation of credit and overdrafts by cutting up their cards and only using cash. Cash can make it easier to budget and to stick only buying what you can afford to with the money in your hand. This is ideal for those who may not have the self-control when it comes to using cards for purchases.

3. Anonymity

Debit, credit and online transactions can all be easily tracked and monitored, meaning many people from your spouse to the government can review your accounts and spending. Having the right to privacy is essential, and having all transactions available to find can infringe on this privacy.

Cash helps to maintain privacy and your right to a private life, without your occasional indulgence or buying a gift for someone being discovered.

4. Accessibility

For people with physical or cognitive disabilities, cash can be more accessible. Using screens and entering digits for a PIN may be difficult for some people. Whereas physical money can be easier to handle, use and understand.

5. Reliability

In remote locations or during power outages, there is potential for card payments not to be accepted. Electronic systems can fail, payment systems may need rebooting during problems, whereas cash doesn’t rely on other systems to work. In fact, 37% of the UK population say they need to carry cash because the shops and services they regularly use do not, or are not able to take digital payments.

6. Finality

When it comes to payment, some forms can have a delay, which means you may have potential debt hanging over you or payments to budget for that may not have been processed. With cash payment, you pay immediately, and there is a sense of finality with your transactions. There is no bill to pay later or a period where you wait for funds to clear. This serves as an advantage for both businesses and consumers.

7. A Safety Net

With recent banking crises, many individuals have been distrusting of banks. Along with issues such as poor interest rates, many people are choosing to hoard their cash and storing it physically, rather than depositing it into a bank account. Research shows that at least £3 billion is hoarded in the UK. This could be hidden in homes or in a safety deposit box. Other studies have found that the amount hoarded in the UK may be closer to £5 billion.

While people may not be achieving a financial benefit such as capitalising on interest rates by hoarding, having money close to hand does provide people with a sense of security and well as providing a safety net for emergency expenses.

Are We Close To A Cashless Society?

Currently, research shows that up to 17% of the population, which is equivalent to over 8 million adults, would not be able to manage in a cashless society. This is for a variety of reasons such as not being eligible for a bank account to disabilities or debts. As a result, businesses and the government must ensure that there is the infrastructure in place to manage cash. Furthermore, payment options need to be accessible to all consumers.

If society does want to move towards a cashless system, then better infrastructure needs to be created to ensure digital payments are accessible to every single individual in the UK, regardless of age or ability.

While it is true that digital payments are increasing, so is the number of notes in circulation. In 2019, the value of notes in circulation was over £71 billion through 3.9 billion notes. These numbers continue to increase year on year; a clear indication that cash is here to stay.


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