Is Cash No Longer King in the UK? Cash Usage is Expected To be Halved by the End of 2021
As technology advances, new payment options have become available worldwide and people are becoming more accustomed to using them. And with that, cash is becoming a thing of the past. The UK is no stranger to this dynamic and the present-day context might be pushing this transition to cashless payments faster than we thought.
“Cash not accepted here”
Since the pandemic touched down in March 2020, many people have been prevented from paying with cash. According to surveys, around 34% of people have reported being prohibited from paying with cash This phenomenon has been spreading rapidly within UK, particularly in grocery stores, consumer goods shops, restaurants and pubs.
Technology doesn’t stop
Although research out of the Bank of England indicates that the risk of contracting Coronavirus via cash and coin is low, many UK businesses are demanding customers pay via app. With the emergence of services like PayPal, Venmo, Zelle, Cashapp, ApplePay, and many others, the general public now has more options to pay online and via mobile app. These applications have become easier to use and more widespread. Some financial institutions have even begun to rollout their own apps and establish partnerships with others.
Motivated by the pandemic, consumer groups have started to work with several important retailers in order to provide more options to customers who can’t or won’t pay with cash. Of course, the groups also encourage shops to continue accepting cash, since it could help people out in a difficult situation, but there is an ongoing push to diversify payments.
The fragile cash system
The Coronavirus has revealed the many weaknesses within the UK’s cash system. Many people have gone cash-only because they are unable to conveniently deposit cash as many local banks are closed due to lockdowns or are too far away. The government also lacks precise legislation to protect cash and the Financial Conduct Authority (FCA) is not yet fully responsible for tracking cash acceptance levels. This could mean that any major system failure could leave millions unaccounted for while the cash network crumbles and factors like inflation and interest rates continue their rollercoaster ride during the pandemic.
As more businesses embrace cashless options, a large portion of the population might not be ready for this. Those with little access to technology and people in need will struggle to adapt to the new cashless reality. That said, the government is long overdue in reforming the UK’s financial infrastructure in a way that doesn’t hurt consumers and protects the viability of the cash, while acknowledging the digital evolution of everyday transactions in a connected world.
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