The future of cash

With the number of cashless transactions increasing year upon year, are we on the brink of binning our coins and notes for good?

By Fraser Albiston.

17 March 2020 (22 days ago)

With the fast-growing development of technology, our day to day living habits are becoming more and more convenient. The way that we pay for everyday items has changed with the implementation of online shopping and contactless payments. There is now less of a need to carry cash in our pockets as all we need is a debit/credit card or simply just our phone. In the last decade, the proportion of cashless transactions in the UK has risen dramatically from 38% to over 60% with this number expecting to rise further over the next decade. It now raises the question whether there could be a cashless society in the next 50 years or more.

A reason as to why there may be a potential for a cashless future could be just the sheer convenience as well as the security with credit/debit cards. In 2018, the number of cash withdrawals in ATMs around the UK was around 2.4bn, which is the lowest amount of withdrawals since 2003. Furthermore, cashless transactions made online were valued at around £586bn in 2017 with half of online purchases made by phone. This proves that people in the UK are beginning to prefer a quicker way of purchasing goods that does not involve taking out cash from a bank or ATM. Moreover, with the use of passwords and biometric security such as retina and fingerprint recognition, there is a reduced risk of people’s money being stolen compared to someone carrying cash on their person.

A further benefit would be the curtailing of criminal activities such as, drug and people trafficking, terrorist financing, money laundering etc. Since cash is virtually untraceable, it is possible for criminal groups to conceal their illegal transactions. In a cashless society, this would not be the case. Likewise, a cashless society would eliminate VAT and tax evasion on the cash-in-hand economy resulting in higher revenue for the UK treasury. This revenue can be fed back into the country and can improve the wellbeing of the population through the NHS, education system, infrastructure, etc.

However, there are potential problems that can restrict a fully cashless society. One main issue being how much control banks and the government could have on an individual’s finances. First, a cashless society would mean that every single person would need to have some sort of account to store their money, and as of last year there are 1.3 million people recorded not to have a bank account. Moreover, people feel more in control of their money by using cash and do not trust paying for items digitally or online as they prefer anonymity. Furthermore, there is the issue of poor internet connection in rural areas of the country which would limit the use of digital payments. Therefore, a cashless society would affect 3.7 million people in the UK who do not use the internet due to living in rural areas.

To conclude, there is huge potential for a society to run without the use of cash and would provide many benefits not only to the wellbeing of the population, but also to the planet from the reduction in resources used to make cash. However, the lack of privacy and control that people would have may be of concern. Secondly, technology would need to develop a lot more so that everyone including those living in rural areas are able to utilise and benefit from a cash free society.