Does anyone still use actual cash any more?

Do you still carry cash? It is beginning to feel as if cash is going out of fashion. And there is sometimes talk about cash disappearing altogether. But could that ever happen?

In this article we look at:

• Who uses cash?
• Where do people get their cash?
• What are the alternatives to cash?
• Will cash ever disappear?

Who uses cash?

Even before the pandemic, fewer people were using cash than ever before. In 2019, only 23% of all payments were made using cash, compared to 60% ten years earlier. 

During the pandemic, these trends continued, with around 60% less cash being withdrawn from ATMs in March 2020 than the same period in 2019. Even by October 2020, ATM usage was still around 40% lower than the previous year.

Some of this drop in cash usage was because spending as a whole was reduced during the pandemic. But there were also particular concerns about the possibility of the virus being transmitted via notes and coins, which led some of the businesses that were open to refuse to take cash payments.

However, there are still many people who do use cash. Around 2 million people in the UK depend almost entirely on cash for their daily needs, particularly older people, vulnerable people and low-income households who may have less access to digital methods of payment..

Around 34% of the population as a whole also like to use cash some of the time for other reasons, including:

• To help manage their spending

It is far easier to overspend using a card than if you have to pay cash.

• To have control over their money

 Carrying cash can protect against any technical glitches with cards or other digital payment methods.

Where do people get their cash?

Around 90% of cash withdrawals are from ATM machines. The remainder comes from bank or Post Office branches, cashback from shops or by being paid in cash. 

However, there has been a 25% decline in free-to-use ATMs between 2018 and 2021, particularly in less populated areas. 

Because of this, alternative sources of cash provision are beginning to be offered. For example, there is a growing Cashback Without Purchase initiative, run by LINK. It is already live in around 1,000 stores and will be extended to a further 1,000 by the end of the year. Customers who have a UK bank account can request to withdraw any amount between 1p and £50 in cash at the till, even if they are not making any other purchase. 

You can search for your nearest stores offering this service either at LINK Cash Locator online or download the free LINK Cash Locator app from either the Apple or Google Store.

What are the alternatives to cash?

As well as the availability of cash from stores, there are also more digital payment methods available. Two of the easiest alternatives to cash are contactless payments and digital wallets.

• Contactless payments

The contactless payment system enables you to pay for something by tapping or waving your contactless device (most commonly a debit or credit card) over a reader. The reader uses a technology called NFC (Near-Field Communication) which enables devices to transfer data within a very short range.

In October 2021, the contactless payment limit was raised to £100, enabling payments up to this amount to be made more quickly than having to enter your card and PIN number. In this respect, it is just as easy – if not more so – than paying cash.

• Digital wallets

A digital wallet is an encrypted payment system that you can access on a smart device. It can store information about your debit and credit cards, meaning that you can use your device to pay for goods instead of having to carry a physical debit or credit card. 

As with a contactless card, if you are in a shop that accepts digital payments, simply tap your phone onto a digital payment terminal i.e. one that accepts contactless payments. 

The most popular digital payment apps in the UK and Europe are:

• Apple Pay (507 million users)
• Google Pay (39 million users)
• Samsung Pay (51 million users)

Will cash ever disappear?

The big question is whether cash will ever disappear completely. Certainly with the growth of digital payment systems, it would be possible for most people to manage perfectly well without cash. 

However, whilst we can certainly envisage a future world where cash has been completely replaced, it seems like we are not quite ready for that. There are still many people – such as the elderly, low-income households and rural dwellers – who do not currently have ready access to digital payment methods and could face financial exclusion if cash were to be withdrawn altogether.

At Loans 2 Go we don’t see cash completely disappearing any time soon, as this could lead to further inequality in the provision of financial services to everyone. We aim to serve the population as a whole, and our emergency loans of between £250 and £2000 can get cash to you when you need it most.

Check back here soon for more financial and lifestyle tips from Loans 2 Go.