The relentless drive of digital transformation continues to sweep all before it and the latest casualty of the flight to cyberspace is cash.
It may have seemed inconceivable a generation again that banknotes and coins would ever be redundant but an independent Access to Cash Review, published this, week has led to predictions that the UK could be a completely cashless society as early as the late 2020s.
The fact is that, with ever simpler virtual and electronic ways to make the smallest transactions, fewer of us are using physical money.
We’re paid and most of our transactions are done electronically. Why would we go to the bother of visiting a bank to retrieve a physical product to hand over to a third party when it’s all done remotely for us by cards and smartphones?
It won’t be long before we won’t even require those – a chip inserted under our skin will mean we will soon be able to pay for anything just by holding our hand over a receiver.
But is the death of cash either inevitable or desirable? How many of us still use hard currency and what are the potential problems of doing without it?
In the past decade, cash payments have fallen from 63% to 34% of all transactions with use of debit cards increasing exponentially. In 2017 the number of contactless transactions in the UK doubled to 4.3billion.
The catering industry has more skin in the game than most. Restaurants, hotels, cafes and bars are going increasingly cashless to speed-up service, reduce bank charges and improve security but not everyone’s happy – including many staff and customers.
Because people on lower incomes are more likely to still use cash, increasing reliance on electronic payments is seen as discriminatory.
The Access to Cash Review warned that the 17% of the UK population - some 8million mostly elderly, low paid and unemployed adults who still use physical money - would struggle in a cashless society.
The “fast-casual” sector, which accounts for the bulk of smaller transactions, would be hardest hit. In the catering industry this means customers of fast food outlets, pubs, cafes and coffee shops.
For owners, the stubborn refusal of cash to disappear completely is often irritating and costly. For business where cash makes up less than 20% of takings, processing it can take a disproportionate amount of time, incur bank charges and it requires additional security.
In remote areas where local branches are closing, it’s now more difficult than ever to get to a bank to deposit cash. Removing cash completely would prevent till mistakes, eliminate staff theft, receipt of fraudulent notes and reduce fit-out costs for safes required by insurance companies.
Meanwhile, a transaction revolution is taking place in a deregulated cashless market where it’s easier and less expensive than ever to take payments electronically.
New technology and the arrival of new operators are putting an end to long contracts, costly and bulky card-readers, high set-up fees and opaque transaction charges for every variety of card (some fixed cost, others a percentage), imposed by traditional service providers.
Light and reliable, go-anywhere card readers that don’t tie operators into long contracts mean transactions incur a cost of 0.49% of sales, as opposed to 0.15% for cash.
Older people might still budget for a night out in cash but, generally, we all carry less – under £5 day-to-day. Millennials increasingly rely on smart money apps, capped prepaid cards and “challenger” banks that offer instant updates on card transactions and balances.
But what about the 2.7million Britons who continue to deal entirely in cash? Catering businesses that dictate how customers pay could be, however unintentionally, discriminating against their older, less well-off and less educated customers.
Around 1.5million people in Britain don’t have bank accounts because of poor credit histories. In places that don’t accept cash, they’re forced to use expensive prepaid debit cards that charge set-up and ongoing transaction fees – for example a 50p surcharge to buy a £2.80 coffee.
Refusal to accept cash excludes and penalises the poorest in society and it could lead to a significant online and media backlash. If, as an operator, you pride yourself on your social responsibility, perhaps the best thing to do is to work proactively to continue to take cash.
And what of your staff. It may be simpler for to charge everything electronically but statistically, cash-free customers are less likely to tip. Even where they do, the tips are recorded in the employers’ account and it’s up to staff to retrieve those from their boss. While ethical employers will always pass on gratuities, others may not.
The decision about whether we go fully cashless is ultimately down to us, the consumer. It may be more convenient but is it as equitable and straightforward as we think?
What do you think? Is an industry of cashless transactions an unavoidable future? Will we ever see a cashless society? Share your thoughts with us below!