When was the last time you used cash? I’ll give you a minute.
Since the start of the pandemic, the UK has seen a sharp decline in the use of cash. The volume of cash withdrawn from ATMs has dropped by 60 per cent during the first national lockdown than in the same period in 2019. Due to government guidance on the risk of surface contact, businesses and individuals who once relied on hard cash are now having to adapt.
Research published by LINK, the UK’s main cash machine network, shows that more Britons are turning to contactless and digital payments during the Covid-19 crisis, with almost three quarters believing that the pandemic will reduce their future use of cash. Natalie Ceeney, Independent Chair of the Access to Cash Review, told me that when they finished their review a year ago, they thought “the end of cash would be in 10 to 15 years; Covid might have accelerated that to next year.”
The use of debit cards as the primary mode of payment overtook cash in 2017—and Covid is accelerating the trend. A Bank of England survey in July found that in the previous six months, 42 per cent of people had visited a store that did not accept cash, a significant increase from 15 per cent last January.
But is the use of cash declining because people genuinely prefer to use cards, or is the choice being made for them? Marc Terry, Managing Director at Cardtronics, the world’s largest ATM operator, told the Financial Times that “it’s a bit of a self-fulfilling prophecy that we’re moving towards cashless, when in fact what’s happening is we’re creating it by depriving people of the ability to make a choice.”
Respondents to the Bank of England survey gave two main reasons for using less cash: retailers not accepting it (44 per cent) and health concerns about handling it (35 per cent). But how high is the risk of virus transmission? The Bank of England commissioned an experiment to better understand this.
It was found that although the level of the virus remained stable on the banknotes for an hour after exposure, it declined rapidly over the next five hours. After six hours, at most only five per cent of the virus particles remained. In retail environments, the infection risk is actually much higher when handling “high-touch” objects like shopping baskets or a PIN keypad. Cash, however, is typically stored away in wallets or tills, reducing the risk of contamination. Even when low levels of the virus exist on banknotes, there is little evidence to suggest these levels could establish infection.
Ceeney of the Access to Cash Review hopes this study will debunk the “misinformation and scare stories” fed to retailers at the start of the pandemic. She told me that if the UK isn't careful, we will “sleepwalk” into a cashless society and leave behind the eight million people who still rely on cash. The government’s guidance on using contactless risks excluding some of the most vulnerable members of society, leaving those dependent on cash even more isolated.
Those who earn less than £10,000 a year are 14 times more likely to be dependent on cash than those who earn over £30,000 a year, simply because cash is still one of the best ways to budget. The elderly, for example, often use cash to simplify their day-to-day budgeting. But they are not the only people who rely on cash—1.4 million people in the UK do not have a bank account. Domestic abuse and homelessness charities also say the people they work with often use cash to survive—all the more important as abuse cases rise with lockdowns.
The UK cash infrastructure costs around £5bn a year. With the pandemic, this has become increasingly unsustainable, causing ATMs and bank branches to close nationwide. For those reliant on cash, this is a huge problem. “We need to think innovatively” Ceeney urges, “and use already existing technology to keep cash viable.” In April, her team will be piloting post offices with cashback facilities: the post office is already in 11,000 locations across the UK, effectively allowing better access to cash for little added cost. “We need to view cash as a utility, much like water or energy,” she says. “The infrastructure is already there; we just need a change in mindset and legislation.”
While the Bank of England says it will maintain public confidence in the availability of cash, Ceeney worries the current infrastructure is “close to collapse.” As we transition into the age of online payments, it is clear that cash must still be kept accessible until everyone has the option to go digital. We can either bring everyone with us, or risk leaving millions behind.
