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Total spend on debit and credit cards hit more than £67billion in the UK in June this year, according to the latest information from UK Finance.

That’s an increase of 19% compared to the same period in 2020.

And of those card payments 66% of debit cards transactions are now made via contactless, with 51% of all credit card spend made through contactless.

Compare that to the continued fall in cash payments.

The amount of cash payments has reduced by 60% in the last 10 years, according to the Bank of England.

And this is a trend on a rapid rise after the last 18 months.

While consumers have long been shifting towards cards and contactless, COVID-19 forced businesses to adapt quicker, and many made a complete shift to card machines, refusing to accept cash.

In fact, during the first lockdown in 2020, consumer group Which? reported that one in three people had tried to pay for something with cash, and been refused.

But cash still plays an important role in the UK economy. And there are many people who still rely heavily on being able to access cash.

And concerns are so high that cash is becoming harder to access that the Government has recently completed a consultation on the future use of cash as part of legislation to protect access to cash in the long-term.

But with consumers and businesses all turning to cards and digital payments and businesses increasingly incorporating contactless card machines in store, is the use of cash still sustainable?

Why are fewer people using cash?

The fall in cash payments isn’t a result of COVID-19.

It’s been happening for many years.

In 2017 debit card payments had already overtaken cash as the most frequent payment method in the UK – making up more than a third of all payments.

Part of the reason is simply convenience.

As online banking became more popular, and contactless technology made card payments easier and more convenient than both cash and Chip and PIN, customers naturally gravitated towards card payments.

Another reason cash use declined, is because it became harder, and more expensive to access.

Between 2015 and 2020, 20,000 ATMs disappeared from the high street as local bank branches closed.

By the end of 2020 there were only 53,000 cash machines in the UK.

And as fewer ATMs were available for free, more Pay to Use machines cropped up from private providers who charged consumers a fee to withdraw their own money.

It was almost like a perfect storm.

And then COVID-19 came.

Who is still using cash?

While it would be easy to dismiss cash as an outdated payment method, there are still people who rely on it.

Not surprisingly, a report produced as part of the Government’s Access to Cash consultation found that more than half of people over the age of 75 still used cash rather than a bank card.

But there are also younger people who rely on access to cash.

Nearly a quarter (23%) of 18-24 year olds said they prefer to take cash out with them – rather than a debit or credit card – saying it helped them budget their money and get better control over their bank balance.

People with disabilities are also more likely to choose cash over card payments.

Those with learning difficulties may find it hard to remember a pin number.

If they have sensory impairments, they might prefer the tactile nature of notes and coins.

There are also still some services that accept cash, like tradespeople and mobile businesses.

Because of this, 14% of people say they like to have cash in the house just in case, so they don’t get stuck if people and places don’t accept card.

Overall, it seems that the majority of people who use cash as a main payment method, do it to help them control their spending or to avoid potential security risks with bank cards.

How to protect our access to cash

Since 2019, the government has been putting measures in place to increase the amount of cash payments in the UK.

This includes being able to withdraw cash from more retailers without having to make a purchase, and requiring that banks have withdrawal facilities available.

While there are benefits to using digital payments, there will always be a space for cash – even if just as an emergency backup.

The recent consultation defines the Government’s objective as one that maintains a ‘stable use and distribution of cash’ in the UK.

They plan to safeguard access to cash for those who need it, ensuring financial inclusion for all parts of society, including the most vulnerable.

To do this, they have or are planning on making withdrawals easier.

Although a lot of people found they had to pay to withdraw money at their local cash machine, the consultation identifies this and proposes to make more free to use machines available.

But not everyone wants to use a cash machine to get cash.

Some prefer to go to a post office or bank to withdraw it.

Again, this has been recognised by the government and 8,000 bank and building societies, and 11,000 post office branches have agreed to the Banking Framework, which promises to make cash withdrawals easier.

In regards to cash payments, the government has said it’s hard to make them mandatory in businesses but it’s on their radar and they want to make cash acceptance more widely available.

Will card always be number one?

Although the government is putting these steps in place, it’s hard to get away from the fact that people do prefer to use their card or smartphone to make a payment.

It’s convenient and much quicker than getting the correct change together.

So, while protecting people who rely on cash should remain a priority, it’s critical businesses recognise the shift towards cards and digital payments and ensure they have the facilities to accept them.

Failing to do will just put those businesses on the back foot.

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