For the past few decades, the use of cash in the UK has been steadily declining. Although new bills are being minted all the time in the UK, cash now accounts for a smaller percentage of all transactions in the country, and it is continuing to decline. While people love the feel of owning and controlling physical cash, the downsides compared to digital transactions far outweigh the positives. Susceptibility to loss, theft and damage, means that it is only a matter of time before they are phased out.
Nowadays, the majority of adults own a bank account and a debit card. This allows them to be paid electronically – very few jobs still pay cash in hand for a variety of reasons – and it gives them better access to financial services such as loans, credit cards and mortgages, as the lenders have a wealth of data at their disposal to make a decision. Using cash has never been convenient for large transactions such as paying these loans, as the risk of just holding onto them is quite high. Access to bank accounts electronically has really lowered the need for cash in this aspect.
It was only a few years ago that cash used to be more convenient. Stores didn’t have card readers, public transport only accepted cash and ATM’s were prevalent. That has all changed, especially since the turn of the last decade when phones began to include wireless payment technology, forcing many businesses to upgrade their systems in order to accept such payments. Now, almost every convenience store, bus and train, and restaurant has an electronic payment terminal. Cash has truly taken a back seat in this sense.
There are, however, still many people who prefer holding and using cash because it is tangible. Especially with the older generation, there is scepticism about banks and how secure your money really is with them (think back to the fairly recent 2008 credit crisis). They are also the most reluctant to use digital payments due to many not being so tech-savvy and finding it difficult to understand ever-evolving technology. With this demographic, we can see cash use still being a firm favourite and slowing down the uptake of electronic payments.
Technological advances, on the whole, are pushing us away from not only cash but also physical recordings. The current evolution of blockchain technology could mean that in a matter of years, cash and even electronic payments as we know it with fiat currency could be obsolete. Blockchain technology is near-tamperproof and has so many uses from payments, creating contracts, to even recording for room booking systems. Everything that can be digitally recorded can be done using blockchain technology and this is likely the biggest threat to cash transactions in the long term.
Physical cash, at least in developed countries is on its way out, but certainly not without a fight. Judging by the speed at which digital payments are progressing, however, it wouldn’t be surprising if they became obsolete by 2030. In other areas of the world with weaker financial systems, going cashless could be more beneficial to fight issues such as corruption, but a lack of infrastructure such as internet connectivity is a big hurdle.