The UK is gearing up to follow the footsteps of Norway and Sweden as an increasingly cashless society given the sparse usage of cash post-pandemic.
London in particular has become a hub for online payments, with a significant number of retailers no longer accepting cash. The transition was intensified by the need to socially distance during the pandemic, as the usage of e-wallets and digital transactions has accelerated.
According to the World Economic Forum, the use of cash has been decreasing internationally, with currency use in the US falling from 10.4% of the GDP to 8.6% between 2021 and 2022, and falling from 10.1% of the GDP to 9.8% in the Eurozone during the same time frame.
Additionally, 90% of central banks are developing plans for central bank digital currency (CBDC) that have the potential to reduce the use of cash.
Positioned steadfastly against this shift is the Payments Choice Alliance, an organisation that demands that every person in the UK should be provided with options around making payments.
Ron Delnevo, chair of the Payments Choice Alliance, explained the aims of the initiative: “The ability to use cash in the UK is under threat. We are facing a situation where a lot of people are not being able to exercise choice, that they would have had until very recently, in making payments.”
“The Alliance is not an industry body; it is made up of people from various sectors of life who believe in payment choice, and associated rights and values such as democracy, free speech, independence, and privacy. We believe payment choice is a pillar of democratic society – and it is a pillar we are aiming to keep in place.”
Elaborating on population segments which are at risk of becoming isolated without cash payment options, Delnevo notes that there are around 40 million adults in the UK who fall in to this category.
These may be people from socio-economic brackets which cannot afford new technology, older generations, travellers who do not have access to overseas cards, and small businesses that use cash for budgeting purposes.
Speaking from the opposing perspective is Martin Bradbury, regional director of financial services UK&I at Dynatrace. Bradbury says: “A cashless society enabled by digital innovation has the potential to unlock a range of economic and social benefits.”
He adds that multi-factor authentication and encrypted digital wallets can further protect users from fraud and theft, making a cashless society more secure.
Explaining the ways in which lower-income communities and older generations can be included in a cashless system, Bradbury furthers that personalisation, education, and inclusion need to be phased in the approach: “Interfaces and apps should be tailored so that all levels of digital skills and economic circumstances are fully catered for.”
For example, there is often an assumption amongst those who are digitally native that everyone has access to the necessary technology but this might not be the case. A good payment experience also differs across socio-economic groups, and so banks need to tailor each experience and educate users on how to best use the services for their specific situation.”
He continues to say that governments and banks should use data collected and AI automation strategies to assess payment behaviours and see where the customer experience can be improved for all societal groups.