New research by GalaCasino.com has predicted that 2043 is the year which the UK may become a completely cashless society.
By using linear regression on cash usage data from 2004 – 2014, which saw a drop from 71% in 2004 to 53% in 2014, and Payments UK prediction for 2024 (34%), the year 2043 was revealed to be the year which the number of cash transactions reach 0%.
This trend reflects both changing attitudes in consumers, and a shift in the marketplace as smaller businesses are able to afford card payment facilities thanks to companies such as iZettle and SumUp.
The GalaCasino.com research, which incorporates exclusive, expert comments and new survey data, highlights the driving forces behind becoming cashless and reviews what is preventing the UK from ditching cash entirely.
The 2016 survey found that less than two-thirds (66%) of Brits use cash on a daily basis; chip and pin is the first choice when paying for goods and services (45%), followed by contactless (30%). Two-thirds (66%) state their aversion to carrying cash goes as far as avoiding businesses which don’t offer alternative options.
However, despite an overwhelming move towards cashless options, 68% of us would be scared to live in a society that was entirely cashless. Fraud (61%), reliance on technology (45%) and lack of privacy (31%) are cited as the biggest causes for concern.
The introduction of contactless payments and mobile pay has meant that paying by card is more convenient than by cash. According to Barclaycard, more than half of payments under £30 in London are contactless, and cash volumes are forecast to fall by 30% over the next ten years.
Will the UK ever become completely cashless?
Non-cash payment methods overtook cash transactions in 2016, spurring many to predict the end of cash usage in the UK. Payments UK predicted card will overtake cash by 2021, and research by Mastercard shows consumers believe 2036 is the year we will stop using paper money whatsoever4. While their optimism is admired, this research shows 2043 to be a more likely date – although whether or not this will actually happen depends on government action to remove physical currency as a form of legal tender. With certain groups, such as the homeless and the elderly, still sticking to cash as their preferred method, we may be waiting indefinitely for a change in law to end cash once and for all.
Stephen Hart, founder and CEO of CardSwitcher, added: “The move from cash to cashless will follow a similar progression to the demise of cheques. Cheque use has plummeted and there are regular calls for them to be scrapped entirely. This, however, has not happened because there are key groups who still use them.”
How are businesses changing to keep up with the demand for cashless payment?
Many businesses are already well adapted to the demand for alternative payment methods to cash. Small businesses and independent retailers, particularly those in pop up shops and stalls, are often resistant to electronic payments; however, Stephen believes this is declining as they now “have access to low cost, pay as you go systems like iZettle or SumUp. Unlike traditional alternatives, pay as you go systems specifically designed for low volume transactions are helping to facilitate the move to cashless for all sizes of businesses.”
Businesses which choose not to accept alternative forms of payment, either deliberately or due to a lack of knowledge on affordable options available, risk losing custom as consumers move towards companies with more flexible payments.
Ric Leask, head of Casino at GalaCasino.com said: “Our poll showed that 40% of consumers have been turned away from buying products as there was no facility to accept card or mobile payment. It is no surprise then that we will avoid companies we know do not accept cash, particularly as so little use cash on a daily basis.”
What effect will the new coins and notes have on cashless transactions in the UK?
Declining cash usage is a reflection on emerging payment technologies and changing attitudes in consumers; less than a third use cash daily, and these transactions tend to be for less than £5. Only 12% of payments for £20 and over are carried out in cash, reflecting Brit’s decisions to carry less cash and instead use more card.
Considering that the move towards cashless is a conscious choice, it is unlikely that the new notes will have an impact on our decision to use other ways of paying for the majority of our purchases.
Stephen agrees, noting that “new physical currency will help reduce both fraud and counterfeiting […] but will not stop the general trend towards cashless.”