UK Cashless Society Advances As More Than 23 Million People Stop Using Coins
Britain is charging towards becoming a cashless society with almost a third of all payments now made using contactless cards
In the UK, more than 23 million people used essentially no cash in 2021, and a survey estimates that by ten years, only 6% of payments will be made with notes and coins
The figures, which came from the banking organisation UK Finance, are probably going to raise worries that millions of people would get left behind as the transition to a cashless world picks up speed.
However, other data shows that cash is making a comeback due to the cost-of-living problem, with many households under pressure turning to notes and coins to help them budget.
Debit cards accounted for 48 percent of all payments in 2021, according to UK Finance, demonstrating the contactless cards’ steady rise in popularity.
Cash transactions decreased by 1.7% last year, although they continued to be the second most popular, making almost 15% of all payments.
But in 2021, the number of persons who rejected cash rose sharply. This might be a result of some companies ceasing to accept cash temporarily or switching to accepting just cards during the pandemic. There are hints that some consumers avoided using cash because they thought it might spread Covid, as well.
23.1 million consumers used notes and coins either infrequently, just once per month, or not at all in 2021. This was a significant increase from the 13.7 million consumers who didn’t utilise cash the year before. In 2018, there were 5.4 million people, up from 2.9 million in 2016. The 2021 data also show that 1.1 million consumers mostly made daily purchases with cash at the time.
UK Finance stated that it anticipated a continued decline in cash usage. It predicted that by 2031, only 6% of all payments made in the UK would be made using notes and coins.
“Rather than the UK becoming a cash-free society over the next decade, the UK will transition to an economy where cash is less important than it once was but remains valued and preferred by many,” said a spokesperson.
The organisation acknowledged that some people found physical cash useful for budgeting, adding: “Given the rising cost of living, this may impact people’s use of cash over the coming months.”
The Post Office reported this month that its branches handled a record £801 million in personal cash withdrawals during July, an increase of 20% over July 2021 and nearly 8% over June.
Nearly a third of all payments in the UK was done using contactless methods in 2021, up 36% from 2020, according to UK Finance.
The report also provided information about the rising acceptance of buy-now, pay-later loans. According to data by UK Finance, 12% of individuals utilised this to make purchases last year. Although the age group that utilised it most was those aged 35 to 44, younger people were more inclined than older ones to use the contentious kind of credit.
The Financial Conduct Authority was given authority earlier this year to ensure that communities across the UK have access to cash and to penalise banks that disobeyed.
Natalie Ceeney, chair of the independent Access to Cash Review, responded to the findings by stating that there was evidence that cash use had increased for the first time in several years as a result of the worsening cost of living crisis and people turning back to the security of notes and coins to aid in budgeting.
It is now commonly acknowledged that those who rely on cash are typically older, poorer, or more vulnerable, and many of whom simply can’t “go digital,” she continued.
Contactless card payments boomed during the pandemic as retailers sought to encourage social distancing.
Adrian Buckle, head of research at UK Finance, said: ‘Payment trends generally tend to change slowly as we all form habits about the way we pay for things.’
However, he added that the pandemic ‘accelerated the pace of change’, particularly in reducing cash payments.
The financial infrastructure for this ‘new digital’ form of money is being rapidly built in the form of CBDCs (Central Bank Digital Currency) in the UK, Europe, and the rest of the developed and developing world.
The pandemic has induced rapid growth of e-commerce and a shift towards a digital economy. Amid the online debates and conversations around this subject, social media posts claim that the U.K. chancellor will bring in a sweeping change by introducing digital currency, dubbed “Britcoin,” which would replace the existing fiat currency. However, the claim is false.
Attending the G7 summit in 2021, the U.K. Chancellor Rishi Sunak said a public policy principle was being launched for retail Central Bank Digital Currency (CBDC). The Bank of England (BOE) has been exploring the viability of creating a CBDC over the last couple of years. The statement issued by the central bank clearly states that the CBDC will not replace the existing cash and bank deposit system.
Meanwhile, Mr Sunak responded in 2021 to the news of CBDC being explored by the central bank. In a LinkedIn post, he said that a CBDC would not replace the existing cash system; the digital currency would operate alongside traditional currency and allow households and businesses to make payments using digital money issued by the Bank of England.
Recently, many nations have been exploring ways to create a centrally controlled digital currency using blockchain technology. It is gaining popularity as volatility and other risk factors are less than cryptocurrencies such as Bitcoin. The BOE has begun its due consideration of Central Bank Digital Currency. The U.K. central bank is exploring the concept of digital currency through surveys and discussion papers.
online sources: theguardian.com, dailymail.co.uk, logically.ai/factchecks All opinions and views expressed or suggested by the Digital Zeitgeist are not necessarily the same opinions and views held by or suggested by GPM-Invest plus any and all partners, affiliates, parties, or third parties of GPM-Invest. Any type of media distributed by GPM-Invest IS NOT financial advice. Please seek advice from a professional financial advisor