I was picking up up daughter from school the other month, and it occurred to me that over the course of the day, I paid for a few things, without once exchanging coins or notes. It also occurred to me that this is now virtually the norm in UK society, but is that necessarily a good thing?

I can understand the desire to move away from physical currency. From a business point of view (such as with my employers), cash has to be physically taken to the bank, booked in, and transported, and that whole process costs money. A card transaction (or better yet a BACs transfer) costs less, from a business perspective. It is also easier to handle. Given that in the showroom, the typical order value is somewhere between £2,500 and £4,000, that volume of physical is not welcome. It has to be counted, then recounted, and then safely stored away, but should anyone get wind of a large amount of cash on the premises, they might fancy helping themselves to it. It’s not necessarily a major security risk, but it is a risk.

There is also the risk taken to then transport the cash from the showroom to the bank. Again, it’s not all that high, but it only takes one person to decide to mug the poor soul taking the money there, and suddenly all that money is gone. That risk also applies to the customer when they are bringing the cash to the store. You just never quite know what may happen, whereas a credit card transaction is secure, and also carries with it credit card insurance. It’s quick and easy too, for all concerned parties.

Despite all of this, some people still prefer to pay with cash. It’s not an absolute given to say that older people prefer this (I have personally had people of around my age, perhaps younger, spend thousands of pounds in cash to the store), but generally, older generations have a preference for physical currency. I’m not completely certain as to why, though I have my ideas. It’s what they grew up with (chip ‘n’ pin, contactless tech, and smartphone apps are all quite recent developments). There was a time when cash was preferred to card, because once upon a time, companies were charged more for card transactions than for banking cash. To some people, cash is convenient.

The generational situation might be the most pertinent one. Whilst the number of households with mobile phones in the UK has dramatically shot up (in the 2000/01 financial year, it was still under 50%, five years later it was 79%, and is now around 93%), smartphones are something a lot of people are still coming to terms with, particularly in terms of all the options. It is now possible to use a smartwatch to pay for a coffee in a bakery. To some (and to be fair, not necessarily confined to older generations) this is all too much technology. Some businesses are now not accepting cash (a situation brought on in part by the covid-19 pandemic), and it is now very difficult to pay for say, a bus ticket, if you only have cash. Not impossible, but a lot harder. My local bus company expects people to either use their contactless bank card, their mobile banking app on their phone, or to use their app to buy an e-ticket.

This is straight-forward to some, and mind-boggling for others, especially if you’re used to whipping out £2.50 and handing it over. What was once in theory quick (notwithstanding people who had ample time to sort out their fare, only to faff around in their wallets and purses in front of the driver, a real bug-bear of mine) now involves finding the right app, finding the right type of ticket, hoping you’ve linked your banking app to your phone, then paying for the ticket, then activating it.

Nowadays, when you go to a certain popular bakery chain, they expect you pay via contactless, be it via bank card or by phone (or watch!). They even have an app, where you can preload money, and earn points! Not everyone fancies that. Some people just want to hand over a few coins!

There is another advantage to cash. Whereas electronic payments are usually traceable, and subject to invoices and VAT receipts and all that jazz, cash can – in some circumstances- bypass all of that. At a car boot sale, no one is going to want to mess around with card readers and phone apps, though interestingly, these features are seeping into that kind of environment. Taxi drivers now accept card payments, and a lot of food delivery services will accept payments via their apps, and even let you leave the driver a tip via the apps!

My suspicion is that as older generations move on, younger generations, who are growing up with more and more technology and less and less cash, will continue to ease physical currency out of the equation, though I don’t think cash will ever be completely replaced. It will just wind up being marginalised.

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