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Charles Randell, chair of the government’s Payment Systems Regulator asks a pertinent question: “Should access to such a basic financial service be universal, or commercially driven?”
Cashless: “Digital payments are clearly the future”: a spokeswoman for digital payment company Square
One protagonist, Helen Prowse, a spokeswoman for digital payment company Square, spoke at a debate held by Monzo, a London-based fintech startup. “Digital payments are clearly the future.” She continued: “In the UK, plastic payment cards are the most popular way to buy things. Only about 30% of transactions use paper notes and coins, The ratio is already at 15% in Sweden, which will become effectively cashless in a few years’ time”. Quartz journalist John Detrixhe appears to agree. He gives several reasons for ‘getting rid’ of cash:
- When shops switch over to digital money, their workers are less likely to be subject to violent robbery.
- It can also be faster and cheaper to process than notes and coins.
- Cash helps to enable the underground economy through tax evasion as well as illicit finance.
But G4S issued a report (April ’18) showing that cash circulation has increased
G4S which transports, process, recycle, securely store and manages cash published the World Cash Report in April 2018. It surveyed 47 countries covering 75% of the global population and over 90% of the world’s GDP. The findings show that demand for cash continues to rise globally, despite the increase in electronic payment options in recent years; cash in circulation relative to GDP has increased to 9.6% across all continents, up from 8.1% in 2011.
The report highlights the variety of payment habits in different regions. In Europe 80% of point-of-sale transactions are conducted in cash, while in North America, where card payments are most regularly used, cash use still accounts for 31%. In Asia the rise of online purchases does not mean that cash is taken out of the equation, with more than 3 out of every 4 online purchases in a number of countries paid for by cash on delivery.
Access to Cash Review: cash is “an economic necessity” for around 25 million people in Britain
Natalie Ceeney (right), a successful civil servant who is now non-executive chair of Innovate Finance, chaired the independent Access to Cash Review, funded by Link, the UK’s biggest network of cash machines. She said “The issue is that digital does not yet work for everyone.”
The review indicated that physical notes and coins are “an economic necessity” for around 25 million people in Britain, and nearly half of people surveyed said a cashless society would be problematic for them. ATMs and bank branches are under particular pressure in rural communities, where broadband and mobile service is unreliable or unavailable. Next month, the review plans to publish its recommendations on how to deal with declining cash availability.
Nicky Morgan, chair of the UK’s Treasury Committee, said recently, “Whilst cash may no longer be king, it continues to play an important role in the lives of millions. So what we’ve heard today from the PSR should set alarm bells ringing. It’s clear that the whole way that people access their cash via ATMs is starting to fail. With the way that people access their cash seemingly on the precipice of collapsing, the government can’t just bury its head in the sand. . . .”
And what will happen in a cashless society when electronic systems malfunction – as machines do – when the mobile phone cannot get a signal, when cable sheaths fail or when someone accidentally damages a phone cable?