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Are we heading towards a cashless society?

In Sweden, cash transactions have declined by 80%, and the country is widely expected to become the world’s first cashless society. The findings in two reports published by LINK and UK Finance in the last few weeks seem to indicate that the UK is heading in the same direction.

LINK, the UK’s largest ATM network, reported that in the last ten years, cash transactions in the UK have fallen from six to just three in every 10 transactions. Within the next 15 years, it is expected to fall to one in 10. Similarly, a report by UK Finance predicted that only 9% of payments will be cash by 2028.

But more than just a fall in cash transactions, statistics are showing that the decline is happening very rapidly. LINK reported “an accelerating annual drop of 10%” in ATM usage, concluding that “cash access needs preserving”.

This cashless transformation mirrors the situation in Sweden, where just a tiny fraction of transactions are made with cash in favour of increasingly widespread usage of contactless payments, online banking and smartphone apps such as Swish. LINK estimates the UK is only four to six years behind this stage.

A cashless economy has been hailed as not only more efficient for consumers, but equally as a way to fight crime. With all digital transactions leaving behind traceable records, acts such as tax evasion, money laundering and black market transactions will become much harder.

Yet the benefits of such a transition have been met with many challenges. While crime may fall, there is still widespread concern that cashless societies, functioning entirely digitally, are more vulnerable to fraud and cyber-attack.

Concerns about the vulnerability of the system are also accompanied by hesitancy amongst the general population. A cashless transformation risks excluding certain groups, particularly the elderly. With an increasing number of shops, cafés and banks refusing to accept cash payments, those who do not have stable access to the internet or a smartphone face increasing difficulty, rather than convenience. Already affecting a disproportionate number of the elderly in Sweden, the Swedish National Pensioners’ Organisation lobbied the Swedish government to retain the option to use cash.

But the wish to slow down the pace of going cashless is also seen amongst the wider population. Polling conducted in 2018 found that seven out of 10 Swedish people still want the option of using cash. Equally, the campaign group “Cash Rebellion” has been operating for several years in Sweden, arguing that the transition to a cashless society poses threats to individual freedom and privacy. Similar sentiments are on display in the UK, with LINK reporting that 17% of the population felt they wouldn’t be able to cope without cash.  

Sweden is expected to be fully cashless by 2023, and it looks like the UK is rapidly following in its footsteps. While the transition appears to be beyond preventing, it is crucial that the UK starts to take measures to adapt to this inevitability, otherwise we risk “sleepwalking into a cashless society”, as stated by LINK in their report.

“The decline in cash has happened so quickly that our cash infrastructure is in danger of fracturing before we have a plan,” the report adds, also noting that without intervention, the market will face complete restructuring and services will have to be withdrawn.

A review conducted by the Bank of England also echoed the need to press ahead with measures, noting that “the Swedish experience shows that without a coordinated plan, the pace of change risks excluding some groups in society”. Calling for adaptation in regulation and the building of resilience in response to innovation, the report concluded that “a joined-up roadmap for payments infrastructure without leaving anyone behind – alongside next generation payments regulation – should be a priority”.

While it may seem more convenient now to pay with our phones, transfer money on apps and use contactless payments, there are still underlying dangers and strong public resistance to a fully cashless transformation that must not be ignored.

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