Society problems

Is the UK ready for a cashless society?

  • 79% of consumers think more education is needed to help people navigate the shift to digital payments
  • 63% of people aged 65+ have yet to use digital payments
  • Nearly two in five respondents see cash as a backup in case their card is lost, stolen or malfunctions

As the world moves towards a cashless society, not everyone can navigate the shift to digital payments. Although the COVID-19 pandemic has forced faster adoption of cashless transactions in many countries, the reality is that some groups are still at risk of being left behind.

Today, a cashless society would be an ideal format for most governments around the world. Not only will this solve some cash and crime issues like counterfeit notes and the like, but it will also allow businesses to transact with more visibility, avoiding the issues that many businesses face when dealing with huge amounts of cash.

A cashless society is basically an economic state in which all financial transactions are not carried out by physical banknotes or coins. Transactions occur online or through digital devices that enable the transaction between parties.

In Europe, Sweden is one of the first nations to move almost completely towards a cashless society. Statistics from the Swedish central bank show that between 2010 and 2020, the proportion of Swedes using cash fell from 39% to just 9%. The use of cash is mainly limited to small payments or used by the elderly. In shops and cafes, it is much more common to find the sign “Card only” or “Cashfree” than “Cash only” as in many other countries.

In the UK, a survey commissioned by Marqeta of 2,000 consumers showed that 25% have yet to use digital payments – a figure that rises to almost two-thirds (63%) of people aged 65 and over. . However, there are signs of change, as 21% reportedly used digital payments for the first time in the past year. Since the pandemic, four in ten people (41%) have been turned down when they tried to pay cash in the past year and 65% believe it is increasingly difficult to withdraw cash .

Amid growing adoption and enthusiasm for innovations, 83% of respondents expressed concern that going cashless could exclude those most at risk in society, demonstrating the need to ensure that no one is left behind. The research also highlighted the need for greater education on the benefits of digital payments, to ensure at-risk groups are not left behind, with 79% of respondents saying education is needed to help cash-dependent people to adopt other forms of payment.

According to Ian Johnson, SVP, Managing Director, Europe, Marqeta, digital payments offer several benefits for society – from reducing fraud and other financial crimes to environmental benefits, not to mention the fact that it is much safer. than carrying cash. But to go cashless, he believes educating society is essential to show everyone how to live in a cashless world. Otherwise, society risks leaving the most vulnerable groups behind.

“As an industry and a society, we have a responsibility to help cash-only spenders embrace digital payment options, by educating people about its benefits and through more inclusive product design, to ensure that everyone can share in the benefits,” Johnson commented. .

Looking at why consumers still use cash, the survey found:

  • Nearly two in five (39%) surveyed see cash as a backup in case their card is lost, stolen or malfunctions.
  • Nearly a third (29%) of respondents believe they can better track their cash spending.
  • 17% of respondents think using cash lowers their risk of fraud, saying they like using cash because they think it’s safer than digital payments.

As such, banks need to ensure they have better digital services to help consumers track their spending, as well as provide secure digital wallet services to act as a backup when physical cards fail.

Interestingly, the survey also showed that there is also a growing consumer appetite for new technologies and innovation in payments. The investigation showed:

  • Nearly half (45%) of respondents want to “pay by gesture” and have a secret signal to authenticate payments as an additional layer of security, instead of their PIN.
  • 57% of respondents would be comfortable with a “super app”, such as WeChat in China, to make all their payments.
  • 39% of respondents would be willing to use asset tokenization to make large payments.
  • One in ten respondents think cryptocurrencies are the future and want to invest in them.

“Banks need to ensure the benefits of their digital offerings continue to outweigh the benefits of cash,” Johnson added. “Providing consumers with features that help them track their spending, as well as adding additional layers of security to minimize the risk of fraud, are key to easing the transition to an increasingly cashless world.”