27th February 2019
Since 2014, the Royal Mint has nearly halved its production of coins. Last year, 1.3 billion new coins went into circulation, down from the 2.3 billion of 2014. With ATMs disappearing and local bank branches shutting their doors for good across the country, could the UK economy be witnessing the start of a shift towards a cashless society?
Debit card payments outstripped cash for the first time in 2017 according to research by UK Finance. People are becoming more and more accustomed to simply carrying plastic instead of cash, particularly due to the introduction of the new contactless payment maximum of £30 in September 2015. Around 13.2 billion payments were made by cards last year, overtaking the 31.1 billion cash payments. [Did they overtake cash in value? They clearly didn’t in volume!] However, this was the first time where this had occurred, thus making it a significant economic milestone.
Since contactless payment was introduced in 2007 for payments of £10 and under, the method of debit or credit card payment has evolved. Whilst, at first, consumers were sceptical, virtually all major banks now offer the technology as standard with their cards.
Trustworthiness in card payments has increased and cash-based payments have fallen by 15%. Around 66% of UK citizens are using more efficient payment methods free of physical cash.
Sweden is currently operating a cashless society, with 80% of all transactions being made via card or app payment. It is estimated that only around 2% of Sweden’s population ever carry cash on them. The Swedish population truly believes in its banking system and finds this way of living much more convenient. Furthermore, Swedes feel at less risk of muggings or robberies because cards can easily be cancelled.
Generally speaking, the majority of people in the UK are carrying much less cash than they were before. Card is becoming king, which is something the less tech savvy generation are finding it hard to become accustomed to, with 37% of account holders still not au fait with the online technology.
Back in 2015, former special adviser Daniel Korski earmarked 2020 as the year that the UK would be operating a solely digital economy. Whilst that may now seem like a big ask in only two years, the UK already has one of the world’s most cashless societies, with cash currently only accounting for 3.9% of payments by value.
Given the evidence that the UK is moving towards eliminating cash, it could be argued that UK citizens are carrying too much physical money. Making the transition to operating solely via payment cards and apps by 2020 is considered feasible by some experts due to the sheer number of people already living their lives in this way.
UK culture is attracted to convenience and this has bled into the way we purchase and pay for things. Contactless and app payments are now the norm compared to 10 years ago, and so who is to say that technology won’t change over the next decade also?