Cash Still Matters in the U.K.
Cash use over the past 10 years has shifted around the globe. The same is true in the U.K., where cash use further declined during the COVID-19 pandemic. Still, the RSA (Royal Society for Arts, Manufactures and Commerce) warns that a sudden shift to cashless would hurt older and vulnerable segments of society.
To prevent that, the RSA is recommending legislation to protect access to cash. The RSA also recommends that banks provide education on how to use digital banking. In this innovative approach, “banking services and workshops should be provided through mobile banks, community spaces and banking hubs.”
The RSA’s Cash Census, prepared in collaboration with LINK, the country’s largest ATM network, examines cash use in the U.K., how it changed during the pandemic, and how to perform a smooth transition to an eventual digital currency system. The report reveals that while cash payments declined during the COVID-19 pandemic, legal tender remains the U.K.’s second most popular payment method.
Working with market researcher Opinium, RSA polled 3,003 people across the kingdom “to better understand attitudes and behaviours around cash, digital payments and engagement with financial institutions.” Opinium collected responses from 2,504 people through an online panel and augmented them with 499 video-assisted phone interviews.
It’s interesting to note that although cash use declined during the pandemic, so did digital payments. But the overall share of digital went up. Still, people depend on cash for various purposes. Shoppers at newsagents and local shops use it as often as people who use credit or debit (43%). Eighteen percent use cash for transport and eating out.
Budgeting is a big reason for using cash, with 30 percent of U.K. residents saying cash simplifies budgeting. That helps explain why 15 million U.K. residents currently use cash for budgeting. Other cash benefits include:
• Convenient for small purchases (57%)
• Useful in emergencies (54%)
• Higher awareness of spending (35%)
The decline in cash use during the pandemic “was not evenly distributed across the U.K.,” the report says. It fell 20% less in areas with “high levels of deprivation such as the parliamentary constituencies of Liverpool, Walton; Bradford South; and Birmingham Hodge Hill.
There were also differences by age group in attitudes toward cash. For instance, a group the report calls “cash dependents” consists of older people who believe cash “makes them feel in control of their finances.” Another group, “cash keepers,” consists of younger folks that “tend to make relatively frequent withdrawals and are the most likely segment to keep cash at home.”
“Cashless skeptics” consist of the oldest segment, who live mostly in rural areas. “They are generally in control of their finances and have strong concerns around fraud with digital payments. Losing cash would be inconvenient for around half.” Groups such as the keepers, dependents and skeptics would “struggle to cope in a cashless society,” the reports says.
To better understand the effects of the shifting role of cash, the RSA also asked U.K. residents see themselves when it comes to money management.
Here are some findings:
• 89% broadly know how much is in their account
• 78 usually are happy with financial decisions
• 67% are good at managing money
• 21% spend more than they take in
The U.K. is not ready to go cashless, the report says. “Forcing people on to digital could lead to a loss of control over finances and spiraling debts.” As one “cash keeper” quoted in the report put it: “I’m just worried that, especially for the future generations, money won’t mean anything to them, it will just be a number on the screen.”
She is not alone. The report says that almost half of the U.K.’s population (48%) feel “it would be problematic for them if there was no cash in society as they know it.”