Britain risks sleepwalking into a cashless society that could leave millions of people struggling, a new report warns.
According to the Access to Cash Review, Britain could be a cashless society within the next 15 years if the current declining usage trends continue.
The report warns that moving to completely cashless too quickly could lead to millions of people being excluded and put at risk of financial exploitation.
The elderly and disabled could lose their independence, rural communities could be threatened and debt could also increase.
In 2017, debit cards overtook cash as the most popular payment method for the first time.
Cash use in the UK has halved in the past 10 years and is forecast to halve again in a decade’s time.
Today, people are using cash for three in every 10 transactions, down from six in 10 a decade ago. In 15 years, one in every ten payments could be in cash.
Despite the increasing use of cards and electronic payments, cash is still a necessity for eight million people, the report says.
Natalie Ceeney, independent chair of the Access to Cash Review, says: “The decline in the use of cash has been dramatic, and with rapid technology development and adoption this trend will continue.
"But for millions of people in the UK, cash is not a choice, it’s a necessity.
“If we don’t plan carefully for a world of lower cash, in other words, if we sleepwalk into a cashless society, millions of people will be left behind.
“As cash use continues to fall, we need to safeguard the use of cash for those who need it, and at the same time work hard to ensure that everyone can participate in this digital economy.”
The risks of a cashless society
The report concludes that the move to a cashless society could cause “significant harm” for millions of people not supported by digital innovations.
It found that almost half of the adult population (47%) – around 25 million people – would find living without cash problematic, while a further 17% believe it would be near impossible.
The report looks at the potential consequences of an unplanned rush to a cashless society. It found risks include:
- Loss of independence for many, particularly the old and disabled
- Exploitation and abuse for the vulnerable, as digital can lead to a loss of control
- The loss of viability of rural communities as shop costs rise and the local cash economy collapses
- 'Poverty premiums’, where people end up paying more if they can’t shop around, buy online or buy in bulk. As cash reduces, this premium could increase as people lose access to the high street, and debt could increase as they lose cash as a mechanism for controlling their budgets
Still not ready to go cashless
The report found that 97% of the UK population still carry cash on them.
People mainly carry cash around with them still to pay for small things such as gifts and donations, shopping and paying tradespeople.
For many larger purchases, such as household bills, buying a car or booking a holiday, people increasingly use digital payments.
Around 2.2 million people still use cash for all their day-to-day transactions. For this group, lower income is a common factor. Over 15% of people with an income under £10,000 a year rely completely on cash, compared to less than 2.5% of all higher income groups.
Ben Broadbent, deputy governor for monetary policy at the Bank of England, says: “We believe it is important the public has choice in how they make payments. The UK has seen a decline in the use of cash.
“However, we also think that cash is likely to remain a very important part of the payments landscape for a long time. It is true that an unmanaged decline in cash use could limit choice for people and businesses who prefer to use cash.”
|What do we use cash for?||Percentage of the population paying in cash|
|Weekly grocery shopping||30%|
|Day-to-day grocery shopping||54%|
Source: Access to Cash Review, December 2018