Is the UK ready to become a cashless society?

A new report from the RSA (The Royal Society for Arts, Manufactures and Commerce), The Cash Census, has proved that the pandemic has not accelerated the nation’s move towards a cashless society, reinforcing the argument that cash still has a vital place in society for so many people.

The data showed that despite cash usage taking a hit during the pandemic, millions of people across the UK are still reliant on cash and even those that are not reliant still want the flexibility of choice when making payments, with most people choosing to use a combination of both digital and cash payments.

Is cash still important to independent retailers?
While cash took a backseat during Covid-19 due to hygiene concerns, many facets of society still rely on it as a valued method of payment, and independent retailers are hesitant to remove the traditional option. 

Ted Newton, marketing coordinator at Farmer Copleys, explains, “Cash plays an important part to us here at Farmer Copleys although it definitely reduced within our business during the Covid pandemic and we even discussed the potential of going cashless, although we decided we weren’t quite ready to take the plunge just yet. 

“Our last financial year, we had around 13% of cash sales from our total sales, so it is certainly decreasing. We felt we didn’t want to create a barrier for our customers who would like to use that facility. 

“From a business point of view, it would be easier to be cashless just in basic terms of setting out floats, cashing up, banking, theft etc. so when we get there it would take some of the stress out but we also want our customers to feel like we are a place they are welcome with cash.”

However, at The Rhug Estate, cash is already obsolete. Amy Coleman, managing director of Rhug Ltd, explains “We have recently gone cashless and although there are some negatives, I believe the positives outweigh them and I don’t think we’d go back. Our main reason for going cashless was actually because we were experiencing a huge staff shortage and we didn’t have enough people to sort all the cashing up and banking, which could take 2-3 days each week. By going cashless we reduced this down to half a day.”

Bad news for vulnerable consumers
The Cash Census of 2022 has warned that the sudden acceleration towards digital has – and will continue to – put the UK’s cash system under extreme pressure and stated that ‘without a managed transition, millions of the most vulnerable people would not be able to cope, and many more would struggle.’

This is something fine food retailers are also acutely aware of, as Jo Pacey, head of marketing at Crimple, explains. “Cash is often preferred by low-income families who use this method to effectively budget, or those living in areas with poor connectivity. A cashless society would surely alienate the most vulnerable.”

Jen Grimstone-Jones, co-owner of Cheese Etc, The Pangbourne Cheese Shop, mirrored these thoughts. “There are people who prefer to start the week with £X in their wallet and they know that’s their weekly spending money. It’s an easy way to budget and I do think it is very easy to lose track of your spending when you use a card all of the time. We also have customers who refuse to pay with a contactless card as they don’t trust the technology so they will always enter the pin code into the card machine.”

But Amy believes that using cash can actually be riskier for vulnerable people and the older generation. “There are as many risks (if not more!) with physical cash as there are with digital payment systems. Cash can be easier to steal, easier to lose and damage, and more difficult to keep record of. There are many benefits of going cashless for an individual including having your money all in one place, accruing interest on savings, better money management and higher safety.

“There are also several benefits to society such as reduced violent crime, fewer tax evasions, more hygienic and being more difficult for criminals to operate under the radar. I think it’s important we educate those against online payment systems with the facts and once they understand the safety measures in place to protect them, and how easy it can be to use it, I’m sure more of them would feel happy to make the change.”

The effect on independents
According to James Harris, managing director at Volumatic, “The Cash Census report is an important reminder to us all that the UK is a long way off being stable enough to support a cashless society. As well as these key findings it also urges the Government and the finance industry to change their existing policies by supporting and educating people who want to make digital payments, keeping our cash infrastructure viable and maintaining cash acceptance across the UK.”

While it looks like a cashless Britain isn’t quite on the horizon yet, independent retailers are undecided on the effect it could have on their businesses if it was rolled out.

Jen is relatively positive about a possible move to card-only, explaining, “I do think that enough people are still using cash for it to be around for quite a while yet. However, if it did disappear then I don’t think there would be much impact on independent shops. 

“At the moment it does tend to be the independents that are cash-free rather than the bigger chains. Card fees are becoming more manageable for smaller businesses but I do think that more could be done to reduce them, especially if cash is to become obsolete.”

But Susan Roberts, co-owner of Roberto’s Coffee, believes the fees are simply too expensive for small businesses. “My coffee business, as a husband and wife partnership, does not need the added expense of card transaction fees. Throughout the pandemic as a risk precaution this couldn’t be helped, but now I see this as a huge extra expense for smaller businesses with the cost of stock etc already increasing .. but being pushed by the larger companies.”

Moreover, Ted worries that a transition to a cashless system within fine food retail could lose him older customers. “I don’t think we’re quite ready for a cashless society in the very near future, as there is a generation that still doesn’t feel confident with technology and is almost scared to learn about digital payments, and just sticks to what they know and trust.

“We have customers of a certain demographic who will always use cash, they’ll walk to the Post Office to pay their bills with cash etc. just because they always have. I believe they will almost certainly stop using certain shops and businesses that are card-only before they get on board with the modern methods.”

He concludes, “Independent retailers are in a unique position to get a greater understanding of their customers, so this can assist in knowing how their customers feel about it and possibly helping them make the switch when the time comes, whilst retaining their custom.”