Despite cash being less important than it once was, a payment method that continues to be valued and preferred by many.
With the world becoming ever more digital, how important is it that we keep cash flowing?
For years, we have been reading articles and stories on the death of cash and predictions that eventually everyone will use contactless, digital wallets and smartphones to make all monetary transactions; and that our notes and coins will eventually disappear. The question is, how much of that is the actual truth?
A lot of commentators ignore the fact that although payment types such as contactless are in rapid incline, this doesn’t mean that cash is on the decline, with UK adults still choosing cash for an average of 20 payments a month. That’s over a £1 billion worth of payments still being made with cash in the UK every single month, and over £12 billion a year!
In 2019, UK banks started to provide funding in order to ensure all high streets had at least one free- to-use ATM to stop our poorer and more rural communities being at risk of not having access to cash. However, a new ‘Access to Cash’ study released last year warns that many people are struggling to keep up with the digital society and that 25 million people in the UK still rely heavily on cash.
By not accepting cash, retailers, restaurants and other businesses are placing a roadblock between themselves, the customer and potentially making a sale, which can then inherently diminish the customer experience. Is it not better to offer the customer as many payment options as possible in order to remove barriers to payment?
There are a number of implications for businesses that go cashless. From high interest credit card fees, charges and the alienation of consumers who still heavily and/or choose to pay with cash. Businesses are already having to pay high percentages on transaction fees, so splitting the transactions between use of cash and card reduces that overhead. With credit cards fees reaching up to 3% in some cases (plus monthly service charges and authorisation fees), could this potentially mean a hiking prices of goods and services to cover these costs? Is this going to make the business less competitive?
According to The Guardian, ‘Retailers gave £1.3bn to third parties in 2018 to accept payments from customers, up £70m on the previous year. The report said this was largely driven by the fees paid by businesses to credit and debit card companies, which increased by more than 50% in 2018.’
In short, despite an increasingly digital economy, cash remains an important payment method for many businesses and consumers. Cash is anonymous and affords privacy. It’s tangible and for some the only payment method available. With over one-third of all payments made in the UK, being made with cash, the payment method will continue long into the future and although cash might now be sharing it’s throne, it will still remain king.