Coronavirus will hasten the decline in the use of cash as people make a long-term switch to digital payments, experts say.
Lockdown led to a 60% fall in the number of withdrawals from cash machines, although people are taking out bigger sums, and payment card use has risen with online shopping, particularly for groceries. But experts say the long-term future of cash could be at risk, before the UK is ready to cope with the change, which could leave behind an estimated 20% of the population who still rely wholly on cash.
About 11 million cash withdrawals are still being made each week, with £1bn taken out, according to Link, which oversees the UK’s cash machine network. Yet, with people going out less, there is lower demand for regular cash withdrawals – following a survey of consumers, Link suggested that 75% of people were using less cash, and 54% of those asked said they were avoiding cash. There were reports early in the coronavirus outbreak about the spread of the virus on banknotes and coins. However, the Bank of England and World Health Organization have stressed that the risk is no greater than on any other items, and repeated the advice on regular hand washing, although many shoppers are still suspicious of handling it, worried about anything another person might have touched. As a result, even the smallest of traders who once used to wince if you showed them your plastic are now happily bringing out their card readers from the back of the stall.
Some 76% of people asked in the Link survey said they expected to use cash less and move instead to other forms of payment, or online shopping more in the next six months in preference to cash.
Natalie Ceeney, who authored the Access To Cash Review, said that an estimated 30% of UK residents liked having cash as an option but, as a result of lockdown, may now be comfortable using other methods of payment. She described this as a “sticky habit”, which they could stay with in the future. With 50% of the population already operating predominantly cashless, that left only 20% who relied on notes and coins, many of whom were vulnerable, and the pandemic has certainly has not changed many of the key reasons why people use cash, including convenience and lack of access to bank accounts.”
This decreasing demand risks being insufficient for the providers of cash infrastructure, such as delivery and ATM services, to be profitable enough to survive. “The cash infrastructure could collapse before we are ready,” she said
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