personal finance

UK heading to CASHLESS future ‘SOONER than we think’ – but consequences could be DIRE


Natalie Ceeney, former chief Financial Ombudsman, has warned “the economics supporting the provision of a cash infrastructure are under threat” but predicted physical money will still be needed “for decades to come”.

The cost of cash – including printing new notes, running cash machines and moving cash around – amounts to a staggering £5 billion a year.

This means retailers with fewer customers paying in cash are more likely to stop accepting notes and coins, according to Ms Ceeney, as the process of collecting physical money becomes increasingly expensive.

Ms Ceeney, who is now independent chair of the Access to Cash Review, predicted our cash infrastructure will reach a point where “the easiest thing for a retailer to do is to stop accepting cash”.

Speaking to This is Money, she said: “Fewer transactions means less income for the commercial providers running this infrastructure.

“But at the same time, costs are largely fixed and don’t fall away as cash usage drops.

“So basic economics tells us that either retailers and banks need to pay a lot more for using cash, or providers of the infrastructure need to radically cut their costs.

She added: “When only a small fraction of customers pays in cash, it’s worth risking losing them to save on the costs of handling cash.”

Ms Ceeney also warned how companies would be more likely to close cash machines in the near future in areas with low transaction volumes, such as rural towns.

But she questioned how reliable a digital system could really be, with multiple IT failures in recent months alone that have seen customers unable to access online banking or make simple card payments.

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It is this concern, Ms Ceeney claims, which is why many Brits still want to have money in their pockets.

She said: “Many consumers want the option to use cash, more vulnerable people rely on it, and as a country it’s the fallback if parts of the complex IT networks that support digital payments fail.”

There are also fears that many vulnerable groups, including the elderly and disable, will end up being left behind in a word without coins and notes.

Approximately 2.2 million people are almost entirely dependent on cash, according to Ms Ceeney.

Ms Ceeney said: “If you’re someone who can’t or won’t use digital payment – for many reasons – you can be left excluded from many parts of society.

“This should raise many questions for regulators and policymakers in the UK.“

She continued: “As our society shifts ‘digital’, is it acceptable that people who depend on cash should have their choice of shops limited?

“To be excluded from certain activities? To pay more for what they buy?

“Or lose their independence because their ways of coping simply don’t work in a digital economy?”

Ms Ceeney went on to call for changes in the way we pay for cash to be more inclusive in a way that “enables more people to participate in the digital economy”.

This week it was revealed that paper £50 notes will be replaced with plastic ones, hinting that a future in cash is still foreseeable.

The exchequer secretary to the Treasury, Robert Jenrick, said: “Our coins and notes are respected and recognised the world over and are a key part of the UK’s heritage and identity.

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“People should have as much choice as possible when it comes to their money, and we’re making sure that cash is here to stay. Our money needs to be secure and this new note will help prevent crime.”



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