Are we on track to become a “Cashless Britain”?
Cashless Britain may sound like a reference to the next financial crisis or the outcome of a hard Brexit, but it is not.
“Cashless Britain” is instead a fear that the UK is sleepwalking into becoming a cashless society and this will create significant problems for millions.
Those at greatest risk are those living in rural communities and those financially excluded, who are not able to access the financial services the rest of us take for granted.
The trend towards becoming a cashless society is being accelerated not only with the closure of bank branches, but the disappearance of post offices and free ATM machines from our communities.
The recent announcement also that some businesses are now beginning to move away from using cash is also fuelling fears that eventually the whole process will arrive at a tipping point and other businesses will have to follow suit, with many consumers being left excluded.
Cashless businesses on the rise
A recent example is the south London pub, the Crown and Anchor, which after several break-ins, decided to go cashless, as cash-only accounted for 10% of its sales.
It is not alone, however. Increasingly businesses are weighing up whether the hassle of dealing with cash is worth it. In Sweden, for example, Ikea has found so few cash transactions occur in its restaurants now, that it would be cheaper to just give away the food to those using it.
However, the fear that a “Cashless Britain” will not suit everyone, has led to the powerful House of Commons Treasury Select Committee announcing it will carry out an inquiry into consumer access to financial services as the number of free ATMs, bank branches and post offices continues to decline.
Access to Cash Review
The former UK Financial Services Ombudsman, Natalia Ceeney, has also recently completed her interim report as part of the Access to Cash Review, which was set up to understand what needs consumer would have for cash over the next 10-15 years.
She has found that Britain is not yet ready to go cashless and has warned that “if Britain sleepwalks into a cashless society, millions will be left behind”. However, this is what is happening, with the number of cash transactions in the UK falling from six in ten a decade ago, to only three in ten today. It is feared by 2026, the number could be as low as one in ten.
Money Saving Expert, Martin Lewis has warned:
“Many, especially the more affluent and technologically savvy, now live mostly cashless lives. That’s exactly why protecting access to cash is so important. We must learn lessons from the past and plan now, to protect those who need it in the future”
The interim report has warned those most at risk from a cashless society are:
- Those living in rural communities where the declining number of ATMs and the impact of poor broadband and mobile connectivity is likely to have the greatest impact;
- Those who are struggling with mental health and physical problems who struggle to use digital services; and
- Those struggling with problem debts, as budgeting with cash is easier.
The report has also found that those who live in abusive relationships are also likely to suffer a detriment as the dependence on digital services when people have joint accounts will result in a loss in independence.
It has also found the poor generally will suffer, as the poverty premium, the idea that the poor often pay higher prices, will not be able to access the benefits of buying online or paying for services using direct debits.
Are we choosing to become cashless?
However, there is evidence that becoming a cashless society is not necessarily a choice that many of us have made.
The report also found that just under half of those surveyed (47%) felt that it would be personally problematic for them if there was no cash in society and 97% admitted to always carrying cash. The reasons people provided for doing so was they like to pay for the small things in cash (67%) and for over half it gives them peace of mind.
Similarly, the report also found that 85% of people also prefer to keep cash in their homes as it gives them peace of mind (43%) and they like to pay tradesmen in cash (39%).
Age UK has also warned that many elderly people also prefer to use cash as it helps them limit the risk of being financially abused, and submitted to the review that:
“Cash is a great way to limit…. risk. Older people often rely on others to help with shopping and accept that there is a risk of being short-changed. But if they only give a carer or neighbour a £20 note, then they limit their risk substantially, and it’s easy to see the change so that if there is a problem…[they]…can raise it on the spot”.
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