The question of whether we will one day live in a cashless society is at the heart of much debate in the financial services industry.
There are still some big question marks around the future of cash and if it will ever disappear completely from the payments ecosystem. That uncertainty hasn’t stopped an online casino in the UK from putting a specific date on when cash could become extinct in Britain.
According to Gala Casino, the UK could become a cashless society by 2043. The company based its forecast on recent trends in cash usage. But looking at this issue from the consumer side, do people really want to live in a world without cash?
The decline of cash
The research was based on figures showing a decline in cash use in the UK between 2004 and 2014, from 71 percent to 53 percent of transactions. With Payments UK predicting a further 19 percent fall in cash transactions by 2024, Gala Casino pinpointed 2043 as the year when notes and coins could drop out of use entirely.
A survey by the company found that, while two-thirds (66 percent) of British consumers use cash on a daily basis, the same proportion avoid businesses that don’t offer alternative payment methods to cash.
One of the most significant recent trends that has given people an insight into how they could live without cash is the growth of contactless. Tap-and-go payments offer ultimate convenience for people making low-value, everyday purchases. According to the latest data from the UK Cards Association, consumers spent £647 billion ($799 billion) on cards in 2016. Contactless accounted for £25 billion of this total, up from £7.75 billion the previous year.
Graham Peacop, chief executive of the industry group, said cards are now “the preferred way to pay” for millions of consumers and “underpin the retail economy”.
So it seems clear that card payments – and particularly contactless – are becoming increasingly common and cash is going in the opposite direction, but does that really mean cash will one day disappear altogether?
A similar trajectory to checks?
One possibility is that the future of cash will be similar to the current picture for check payments. Checks are clearly not as widely used as they once were, but they remain a significant part of the payments ecosystem for some businesses and consumer demographics.
Stephen Hart, founder and chief executive of comparison site CardSwitcher, said: “Check use has plummeted and there are regular calls for them to be scrapped entirely. However this hasn’t happened because there are key groups who still use them.”
The Gala Casino survey provided a number of findings suggesting that the prospect of removing cash from the financial system would raise concerns for consumers. More than two-thirds (68 percent) of respondents said they would have fears about living in an entirely cashless society. The biggest causes of concern were potential for fraud (61 percent), over-reliance on technology (45 percent) and lack of privacy (31 percent).
Separate research by Qualtrics, focusing on millennials, found that members of this demographic have their feet “firmly planted in both the future and the past”. Millennials are often early adopters of new technologies, but they are also regular users of cash and checks.
There will be many opportunities, challenges and potential future trends in payments for financial institutions to consider over the coming years. Whatever happens, it will always be important for providers to focus on delivering the highest standards of choice and convenience for their customers. Cash is clearly one of those options and while it could be eliminated today, consumer attitudes will determine how long it will be around.