When is the last time you carried a large amount of cash, an amount greater than the cost of a meal out or a couple of rounds of drinks?
For an increasing number of consumers throughout the developed world, the act of actually carrying cash has become unusual, even perceived as risky or suspicious. Card payment is everywhere, no longer restricted to higher value purchases.
Back in 2015, according to the British Retail Consortium, cards overtook cash as accounting for the majority of retail transactions in the UK. (Due to the greater likelihood of card use for higher value purchased, overall value for cashless method was likely far higher).
According to National Rail, card purchases now account for 80% of rail tickets by value.
A significant number of retailers and food service operators in both Europe and the United States are beginning to outright reject cash transactions. Cashless payments offer greater convenience and make both consumers and businesses less likely to fall victim to crime, so what are the downsides?
In the wake of scandals engulfing the tech sector, the obvious downside is vulnerability to tracking and hacking. As an example if you’ve recently paid for the tube on contactless, in theory, TfL and your bank know exactly what journey you took and at what time.
Another often overlooked detail is how phasing out cash can discriminate against certain groups.
According to the Financial Inclusion Commission, almost two million people in the UK do not have a functioning bank account, 60% of whom have had an account withdrawn due to debt or other financial problems.
In the US, according to the Federal Deposit Insurance Corporation, 2016 saw around 7% of Americans defined as “unbanked” – an industry term for not having a functional bank account.
Those without a bank account are most likely on low incomes, living in poorer areas and suffer from a lack of educational and employment prospects.
If cash payment is phased out, these people are essentially further locked out from the economy, deepening systemic inequality.
Other issues yet to be addressed include a reduction in income for those who rely on tips as a part of their income. Charity donations, many of which are wholly cash based can potentially also suffer. Good luck paying by card at a school bake sale.
For more insight and data, visit the GlobalData Report Store (https://www.globaldata.com/store/) – Cards International and Electronic Payments International are parts of GlobalData plc.