Moving towards a cashless society

It’s long been assumed that anything analogue would gradually transition over to digital. Yet sometimes the old ways remain the best.

Vinyl record sales increased last year, while terrestrial TV shows like Line of Duty still attract audiences of over ten million despite the temptations of Netflix and Amazon Prime TV.

The paperless office remains a dream for most people, and we seem to be some way from promises of a cashless society.

Indeed, although the percentage of purchases made using cash in the UK is in decline, the rate of transition to electronic payments remains slow.

Britons are now equally likely to use debit cards or cash for low-value transactions, while the volume of cash in circulation is at its lowest level for nearly four decades.

Nevertheless, millions of people remain wedded to paying for goods and services in cash – for a variety of reasons:

• Tradespeople often rely heavily on cash transactions
• Older people are statistically more likely than other age groups to use cash
• Problems with connectivity often stop or complicate credit/debit card transactions
• Expensive card payment machines are only found in commercial environments.

There are other compelling reasons why cash is likely to remain part of our lives for many years to come…

Rocket from the crypto

Many people saw cryptocurrencies as the panacea to payment issues, but the evolution of bitcoin into a stock market plaything has dented consumer confidence.

In the ten years since bitcoin launched, over a thousand cryptocurrencies have failed.

Bitcoin itself has split into several competing currencies, while the core currency’s value fluctuated by almost 30 per cent in July alone.

Facebook is attempting to peg its Libra cryptocurrency to traditional currencies including the dollar, though its motivations are undoubtedly data-driven rather than philanthropic.

Cheque it out

The humble cheque is less popular today than it ever has been.

Yet despite its steady decline, 96 per cent of UK charities and 86 per cent of UK businesses received at least one payment by cheque in 2018.

As a nation, we sent and received 346 million cheques with a total value of £442 billion last year alone.

It’s obviously impractical to pay for many online goods and services by cheque, while increasing numbers of shops won’t accept them. Yet the cheque is still part of daily life.

Penny wise

One of the undeniable irritations of modern society is the volume of copper change, which is effectively worthless yet hard to dispose of.

Few of us have the discipline to accumulate spare change, and an estimated 60 per cent of coppers are used just once before they are lost or disappear from circulation.

Abolishing low-value coppers would certainly improve the public perception of cash as a practical payment method, though it’s proving rather troublesome to accomplish.

The Bank of England is keen to retire the national stock of one and two pence coins, yet it backed off last year in the face of public anger.

Residual loyalty to the penny as part of the old imperial currency system means many people are instinctively opposed to the five pence piece becoming our smallest unit of coinage.

So when can we expect a cashless society?

In truth, probably not any time soon.

The Northern Rock crisis and RBS’s near-collapse a decade ago did little to persuade older consumers that their savings are safe in electronic form, rather than under the mattress.

Contactless debit cards are growing in popularity, though card theft remains a major problem, with multiple sub-£30 transactions possible before fraudsters are stopped in their tracks.

The ability to make payments biometrically – such as via retinal scans – could revolutionise how we pay for goods and services, but this technology is years away from mainstream acceptance.

Until then, our migration towards a cashless society is likely to remain slow.

Like the paperless office, it remains something we’re assured will arrive one day.

And also like the paperless office, we’re still some way from giving up our notes and coins entirely.