‘Sorry, we don’t accept cash.’ That is likely to be a familiar phrase repeated by staff members and information posters alike for the rest of 2020 as major retailers begin to reopen on mass in mid-June.
Whereas at the turn of the last decade, many local, smaller businesses didn’t accept cards, this has been flipped on its head in a matter of years, with better card payment devices and networks alongside the rise of ‘convenient’ contactless, the limit of which is now £45.
Even our local ice-cream man is only taking card payment now: you have to go on his website, book a slot, pick your flavour and pay by card, before he jingles his way into your cul-de-sac.
Will he accept cash again in the near future? This question can be repeated for all manner of businesses and services big and small – will many choose not to return to handling cash payments once this pandemic is well and truly over?
Shops will currently say it’s safer and quicker to use card in the pandemic and on the whole, they’re right.
Firstly, they don’t have to handle it – but the jury is out whether it really is a less germ-ridden way to spend. The World Health Organisation hasn’t issued specific guidance, but has said where possible, it is a good idea to use contactless.
Secondly, people can tap their card on a machine, rather than dig around for change, holding up queues in a time in which only a certain number of shoppers are allowed in at the same time.
But what about those who like to use cash and don’t want to put every single transaction on a credit or debit card? And crucially, what about the future?
Around one in five of the population are estimated to still need cash. A large chunk of these are vulnerable, including the elderly, disabled or on low incomes. There are also more than a million people without a bank account in Britain.
Meanwhile, around a fifth of all free-to-use cash machines have disappeared in the last two years. They could soon become a thing of the past.
This is a subject I feel strongly about. In summer 2018, I wrote that we’d regret it if physical cash died in Britain altogether and all of our spending was documented.
Off the back of that, we had a warning from Natalie Ceeney, former chief Financial Ombudsman and now independent chair of the Access to Cash Review that cash was going to die out – and she laid out how that was going to unfold.
It is eerily accurate just 18 months on.
Essentially, as fewer consumers use cash, the economics supporting the provision of a cash infrastructure is under threat.
This has been exacerbated by the coronavirus pandemic.
The entire UK cash infrastructure costs around £5billion each year. I noticed recently a Post Office cash machine near my home, which was free, is now charging £1 for withdrawals.
Two decades ago, when three in four payments were made using notes and coins, the high cost of storing and moving cash around made sense.
All parts of the economy relied on cash payments, so paying for the security vans that moved the money to banks or topped up ATMs was shared across a massive base of transactions, Ceeney says.
Before the crisis, use was already dwindling. In 2017, the volume more than halved to just one in three of all payments overtaken by card.
It was forecast to halve again by 2028 to just one in six. This now looks unrealistic depending on how retailers behave post-lockdown and consumers, who have switched to card, and never go back.
Experts warn a decline in cash use expected to take place over five years could now happen within five months.
MPs have stepped in and written to the Chancellor this week demanding urgent action to save the UK’s cash system from collapse.
A letter signed by 37 cross-party MPs says: ‘Cash is a lifeline for many and an important budgeting tool, particularly for the hundreds of thousands of vulnerable people that depend upon it to go about their daily lives.
‘Covid-19 has highlighted the importance of cash, especially for those needing others to food shop on their behalf, whether elderly, vulnerable or self-isolating.’
It’s worth pointing out that card payments are extremely useful. During the pandemic, it has been handy to pay for items in advance using card to then pick-up or have delivered.
But there are a number of reasons why the accelerated death of cash should be a worry.
One of the key ones is removal of choice: people should be able to pay by cash or card as they choose. We shouldn’t be reliant on one or the other – both have their pros and cons.
It is also far easier to budget with cash than it is by simply tapping a card payment.
Card payments rely on IT networks that, as we’ve seen in the past, can fail.
Paying by cash for some items keeps that anonymity. It should be a right, not a privilege, to be able to pay for goods without it being tracked.
As I’ve argued before, spending habits and patterns are knowledge that big organisations want, especially in an age of Open Banking.
Local communities – especially smaller towns and villages – rely on cash. But, as pointed out above, it is becoming more expensive to run the infrastructure, and it’ll be these rural pockets of Britain that’ll suffer.
In a nutshell, it is becoming cheaper for shops to handle card payments than it is physical cash.
It’s a legal requirement to allow cash payments to pay for a debt, but retailers can legally choose to accept whatever payment they want – they can refuse cash, they can refuse card. There is no law stopping them.
It means the fightback begins with the shopper, from ice-cream fans to fashionistas.
I never thought I’d see the day the ice-cream man took card payment – I can’t imagine a six-year-old me excitedly waving down the van flashing plastic instead of a pocket full of change.
How can you teach children the value of money without them ever handling it?
If you don’t want cash to melt entirely and keep the choice of paying with coins or notes for a 99 that costs £2, you need to carry around some emergency cash in your purse or wallet, and let the fightback begin.
If you head to your local cash machine, withdraw cash safely – get that antibacterial gel ready. Ask if your shop is accepting cash yet, and if not, when.
One friend says that his local convenience store is accepting cash again, and encouraging it for smaller payments, such as a newspaper and a pint of milk.
If people don’t go back to using cash, we’ll simply have to face the fact that cashless Britain – like Sweden – will become a reality sooner rather than later. Only then will many bemoan the loss of choice.