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Last year it was widely reported that more money was spent by consumers with retailers on card rather than cash transaction. A British Retail Consortium (BRC) survey showed that only £1 in every five spent in shops is in cash compared to credit, debit and store cards. Sweden is predicted to become cashless society by 2023, with other countries hot on their tails.
Is this the beginning of a cashless economy and if so, is it a problem for businesses or consumers if we don’t have cash anymore?
The benefits of paying with cash
If you are an enthusiastic adopter of digital transactions and rarely use cash, it may not seem a difficult leap into a cashless society but there still some advantage to using cash:
• It’s a fast and convenient way to pay;
• Cash payments are anonymous (although it can also help fund crime);
• It’s widely accepted;
• People find cash helpful with weekly budget management;
• It’s still easy to access cash; and
• Not everybody has a bank account.
What are the challenges of a cashless society?
The introduction of new technologies has facilitated a move towards a cashless society, but this may not be enough to justify a full transition to no-cash, which could present some challenges, including:
• Areas affected by poor broadband or mobile connectivity may struggle with online transactions;
• People with physical or mental health problems can find digital options harder;
• People on low incomes are most likely to be negatively impacted; and
• The risk of online fraud is significant and increasing.
A mind shift is also needed among the public, as the Access to Cash Report found:
• 63% of people said holding money makes them think more about spending it;
• 60% say we would have less privacy;
• 74% would feel more susceptible to cyber-attacks; and
• 74% feel it takes away right to choose.
What are the benefits of a cashless society?
The introduction of cashless transactions has highlighted benefits, so it’s not difficult to see how these could be perpetuated by a cashless society. For example:
• Potentially less crime, as cash is easy to steal, and illegal transactions tend to be cash-based;
• Digital transactions are convenient;
• It’s harder to hide financial crimes as there is a paper trail;
• No need to print money, manage cash storage, move money around;
• International payments are easier if cashless; and
• Easier to manage lost cards than retrieve lost cash.
For businesses, going cashless will present challenges and opportunities. Investment in new infrastructure will be needed and there are costs around every card transaction, but accounting, finance management and tax payments could become seamless and less time-consuming. Ultimately, customers also like the convenience. There is a lot of exciting software and technology now coming to support this, which can make your time more efficient and improve your customer journey, so it can be a win-win.
So, what’s next, cash or cashless?
Cash is an economic necessity for approximately 47% of the population in the UK and a significant proportion are also unsure how they would cope in a cashless economy. What is important now is whether becoming a cashless society will be a revolution, a sudden and disruptive change which some people may struggle to keep pace with, or a gradual process of change allowing people and businesses to evolve.
The Access to Cash Review suggests that the transition to a cashless society could be a gentler, progressive process, and is calling on the Government, regulators and banks to act now to avoid leaving anyone behind. Whatever happens, times are changing for cash.
Black and White Accounting
Every challenge is an opportunity to differentiate yourself from the crowd. Whilst it is not without its challenges, the move to a more cashless society can help both you and your customers if you have the right strategy.
If you would like to discuss this, or any other business challenges or opportunities you’re concerned with, our specialist team are ready and waiting for you. Contact Black and White Chartered Certified Accountants today, populate the “Got a Question” form on the right, or call us on 0800 140 4644.
