News & Views - Savantor

Concerns about the reduction in cash usage

Saturday, 16 February 2019

In its recent report ‘Global Payments Cards Data and Forecasts to 2023’, RBR forecasts that global card expenditure will grow at an average of 10% per year between 2017 and 2023, although the average value of a payment will fall by 7.45% over the same period. This will be primarily as a result of the growth in use of contactless cards at the expense of cash in smaller retailers for goods such as drinks and snacks. 

On the face of it, therefore, this is another step towards the demise of cash. On a global basis, consumers are becoming more comfortable with using their cards for inexpensive purchases, particularly as contactless cards become more commonplace, and the average ticket value will continue to decrease.

Whilst a reduced usage in cash might also be considered to reduce the need to be able to access it, in the UK there are serious concerns that a decrease in the number of bank branches and ATM’s is leaving many people struggling to pay in shops. 

Both the Consumer group Which? and the Federation of Small Businesses say that consumers’ access to cash as an alternative to digital payments should be protected by a dedicated regulator, with Which? calling on the government to appoint one.

Recently Link has announced extra subsidies and said that, from April, it was raising the fee it paid cash machine operators to keep remote free-to-use machines available.

As well as being concerned at the rate of cash machine and bank branch closures leaving people struggling to access the cash they rely on, Which? also believes cash to be a necessary contingency to digital payments and the fallibility of the systems supporting them.

A recent report by an ex-financial ombudsman suggests the UK is risking "sleepwalking" into becoming a cashless society with many being disadvantaged as a result, as banknotes and coins are a necessity for eight million people.

Additionally the Federation of Small Businesses has warned that ATM and bank closures will have a potential impact on the High Street, which is already struggling from, amongst other factors, the effects of online shopping.

UK Finance has said that a mix of different ways to pay is vital for consumers. Their research shows that while cash usage is declining, it will still be the second most common payment method in 10 years' time.

Whilst the utopian solution may be seen by many to be a cashless society, in the UK at least it would seem that there are many other ‘real life’ factors which need to be taken account of and which necessitate the use of cash to continue to be supported in the short term. In March 2018 the Government issued a call for evidence on the role of cash and digital payments in the new economy; the consultation period finished in June and the feedback to the consultation is still awaited. It will be interesting to see both the results and analysis of the feedback and the proposed strategy going forward.

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