According to UK Finance, cash payments fell from 54% to 14% between 2012 and 2022.
It’s a staggering statistic, and one that suggests that cash may well have its days numbered, but are we really about to go entirely digital?
There are some passionate voices on either side of the debate, but what is the likelihood of the UK actually doing away with cash in the near future?
Have any nations already gone cashless?
Not yet.
However, a 2024 report from the International Monetary Fund suggests that we might not be too far away from seeing the first.
It suggested that Sweden would be the first completely cashless economy as soon as the end of 2025. This is unlikely to happen now, though.
While the Swedish government have dialled back their enthusiasm to be the world’s first due to potential security issues, however, the fact still remains that even as far back as 2019, only 1% of Sweden’s 2019 GDP was made up of cash transactions.
Norway and South Korea are the two countries just behind Sweden when it comes to looking close to ditching cash, but the UK still find themselves in the top five most likely.
What have the government said?
Aware of public consternation surrounding the future of cash, the government have repeatedly ruled out any immediate plans for the UK to go cashless.
Emma Reynolds, the economic secretary to the Treasury stated that “we have no plans to regulate businesses – big or small – to compel them to take cash” adding later that the UK was “not anywhere near” going cashless.
What are the advantages of going cashless?
Reduction in crime
Thefts from cash tills would be eradicated overnight in a cashless society, but that’s not the only crime it would tackle.
Tax fraud from unreported cash payments would also be a thing of the past. With every payment made digitally, all would be traceable, meaning that the government could potentially generate millions in taxes that would have previously been avoided.
Counterfeit money still remains an issue too. New polymer notes have helped to reduce this problem, but going cashless altogether solves it altogether.
Ease
Digital payments don’t need a place to be stored safely, nor do they require you to make a trip to the bank to deposit them. There’s also no need to count up the day’s takings once a store has closed.
Many customers also find it easier not to carry cash and loose change around with them, mobile phone payments allow them to pay with an item that they would be carrying anyway.
Those that operate in areas with lots of overseas tourists also wouldn’t need to worry about international payments as these are all processed digitally. No more turning customers away that only have foreign currency.
Hygiene
The Covid-19 pandemic highlighted the role that cash can play in transferring germs. Anyone who has counted up a batch of coins will attest that their hands can become quite dirty afterwards, and although the new polymer bank notes have helped somewhat, there is still no way of knowing where the cash in your hands has previously been.
What are the disadvantages of going cashless?
Privacy issues
Some are concerned that without physical cash in their hands, outside forces can effectively control what they are allowed to spend money on. Purchases that customers would prefer not to be linked to them would also be trackable.
Reliance on internet
Going completely digital requires strong network connections. If the internet goes out, so does the ability to spend or receive money.
While relatively rare, there have still been a handful of instances that a lack of internet has disturbed business operations. Recent problems for Greggs and M&S have potentially cost them significant sums while they were unable to process digital payments.
There still remains some remote areas of the UK in which internet access is less than stellar. Provisions would have to be in place to ensure that there is ample coverage in all regions.
Exclusion
Certain groups, such as the elderly, find it difficult to make digital payments. Removing access to cash makes it much trickier for some to make purchases.
Wondering what the future entails for your business?
Forbes Burton has helped countless businesses to navigate uncertain futures. If you’re concerned about how your business will cope with forthcoming changes, it’s best to get ahead of the issue by taking action now.
Call today on 0800 975 0380 or email advice@forbesburton.com for a free consultation with one of our expert advisers and find out how we can help companies to realise their potential.
