Cash has been on the decline for some years. But where a cashless society once felt a fairly distant prospect we were only dawdling towards, we can’t help but feel that Covid-19 has hit the accelerator pedal on the issue.
In the first few days of lockdown cash use in the UK halved. Since then use of ATM machines to withdraw cash has plummeted by 60 per cent while as many as one in ten shop customers have been refused when they asked to pay with cash for essentials. With the lockdown easing, some shops have since revised their card-only policies, but many have not. Meanwhile a number of companies only just reopening recently, including Centre Parcs, have gone back to business as totally cash-free zones.
The reason behind this, of course, has been a well-intentioned bid to protect customers. After all, a bank card is less likely to spread the virus than cash we were told, despite the fact the World Health Organisation has never explicitly endorsed this, instead simply advising people to wash hands after handling money.
Nevertheless, the pandemic has unquestionably moved on the UK’s journey to being cashless. But are we all ready and is this really the right thing to do?
An independent Access to Cash review from 2019 said 17 per cent of society would struggle to cope with a cashless society. What’s most troubling though is that this 17 per cent is made up of some of the most vulnerable members of our society.
Since the pandemic began, Age UK have seen a huge upturn in the number of vulnerable older people calling to say they’ve been struggling to access their cash from the bank and use it to pay for essentials. Neil Johnson, who works in Age UK’s policy and influencing division, says “a lot of older people may not have the technology or knowledge to use electronic forms of banking.” He adds that as shopping is a social experience for many older people, if they are pushed out of shops because they cannot use cashless payments, this may further increase loneliness.
The homeless, too, are another group that risk being excluded by a cashless society, with many counting themselves among the 1.2 million people in Britain who do not have a bank account, so they cannot make purchases with anything but cash.
"Are we ready, and is it the right thing to do?"
This is a problem The Big Issue spotted in 2018 when it trialled contactless payment machines for some homeless magazine vendors. During the pandemic, though, the organisation significantly upscaled this project to distribute more than 280 vendors card machines. This has given these sellers the opportunity to get ID, a bank account and a smartphone to run the contactless app, all of which improves their prospects. But for all that this is a positive step, Beth Thomas from The Big Issue says she’s troubled by the general impact of a cashless world on the homeless. “If shops move to being purely cashless, it almost puts a sign above the door saying only certain people are welcome and that’s excluding the most marginalised people.”
But it’s not just individuals who may struggle. A recent report predicted UK charities could expect to receive £5bn less in a cashless society, largely from missing out on donations of people’s loose change in collection boxes. For Marie Curie they’ve noted dwindling cash donations for a while, but they say the pandemic has moved the issue on, forcing them to explore more cashless donation options. For some charities, though, this may not be an option due to the costs of setting up contactless payments or the fact some contactless providers charge a transaction fee for card payments.
Even for charities and retailers who want to keep accepting cash, if its use continues to decline, their hand may be forced. That’s because it costs money to move cash around the UK meaning if some shops stop accepting cash, the costs of moving the cash in the other stores will go up. This cost would then be passed onto the retailer, further putting them off wanting to accept cash in the first place. Once the first shops go cashless, all the dominoes topple and the UK’s cash infrastructure becomes unsustainable.
So what can be done? Neil from Age UK says one of the priorities is that the government must stick to a promise they made in the March budget – before the pandemic – to look into making it a legal requirement for all shops to accept cash. He added: “We’d also like to see the continuation of some initiatives started by banks during the pandemic such as posting cash to vulnerable people who can’t get out or offering cards that allow loved ones to spend certain amounts of money on their behalf.”
"If shops move to purely cashless, it will exclude the most marginalised people."
The Access to Cash report also recommended incentivising more convenience stores to offer cashback especially in rural areas where cash machines and banks are fast disappearing.
Then of course there’s the need to give vulnerable people the necessary digital skills and equipment to join in with electronic banking. But as Beth from The Big Issue warns this cannot happen overnight. “We can move to a cashless society in no time at all but to support people in a way that would include them in a cashless society would take years. It’s so important we don’t accidentally sleepwalk into this situation which risks leaving so many people behind.”
Did you know?
The UK is now one of the least cash-reliant countries in Europe but it’s still far behind Sweden where just two per cent of all transactions are now done by cash. In contrast, 79 per cent of the Japanese use cash every single day