UK’s move to a cashless society accelerates
20 Jul 2021
Britain is edging closer to becoming a cashless society with official data revealing a 35% drop in payments made using notes and coins in 2020.
Not surprisingly, spending habits have radically changed during the coronavirus crisis. Last year a total of 13.7 million people enjoyed a “cashless life”, compared to 7.4 million the year before. Five out of six payments are now cashless, compared to 50% of all transactions 10 years ago.
Companies going cashless
An increasing number of businesses now refuse to accept cash, with several choosing a card-only option over the past 12 months.
Swedish retailer Ikea is not accepting cash at its UK stores “for now”; Nando’s restaurant chain has announced customers are unable to pay using cash; and beer company BrewDog is among the hospitality firms who have opted to go cashless.
According to banking trade body UK Finance: “There has been a significant fall in cash use by consumers in a relatively short period of time. Since 2017, cash use had been declining by around 15% each year, so 2020 represented an acceleration of this decline.”
Lockdowns led the shifting trend
As Britain went into lockdown, consumers turned to online shopping as hospitality venues and retail stores – where cash is commonly used – were forced to close their doors. Since then, several businesses have gone card-only, and people have attempted to avoid touching notes and coins due to coronavirus concerns.
Cashless: not for everyone?
Of course, as the move to a cashless society accelerates, there is a worry that some people may get left behind.
The UK Finance findings show around 1.2 million people still predominantly used cash last year, down from 2019’s 2.1 million people.
Furthermore, over 5 million people in Britain are still “heavily reliant” on notes and coins, and consumer body Which? said they “must not be forgotten”.
Gareth Shaw, the head of money at Which?, said: “Digital payments have transformed the way many of us purchase goods and services, but if the shift away from cash is not handled carefully, there is a very serious risk that it will exclude a significant number of people who are not ready or able to take advantage of these payment methods.”
Surge in contactless and mobile payments
These payment types skyrocketed in usage in 2020. Contactless payments in the UK increased by 12% in 2020, making up 27% of all payments overall. Just four years previously this figure stood at just 7%.
There are several reasons for the increase, such as upping the limit to tap and pay last year, and as an increasing number of people believe contactless is more hygienic than handling notes and coins. Indeed, the data shows 83% of people in Britain now use contactless.
As such, with the increase in the contactless limit, coupled with no limit on spending using mobile payment services, Worldpay forecasts mobile to account for a third of payments in the UK by 2024.
Pete Wickes of Worldpay commented: “This research shows the speed and scale of the transformation in consumer behaviour in just 12 months.
“The decline in the use of cash in the UK has accelerated, and while this opens up new opportunities for businesses to optimise and drive efficiencies, we need to be mindful that important parts of the economy continue to rely on cash, such as charity donations and restaurant tip jars, while there are many in society who remain underbanked.”