The following piece was written and submitted by our friends at

Is a Cashless UK Viable?

It’s thought humans have been using hard currency for almost 3,000 years but never has money changed so rapidly than in recent years since the rise of cashless payment technology.

In July 2017 the British Retail Consortium announced that cash was no longer the most popular payment method in the UK and that card payments accounted for 54% of retail transactions and almost 75% of total sales.

So, with the direction of spending methods becoming extremely clear, the reality of a fully cashless society is looking more like a case of when, not if. But, how does the increasing use of digital wallets and contactless payments affect businesses and retailers of all sizes? Can everyone in society embrace and benefit from this inevitable cashless trend?

51% of Millennials Aren’t Using Cash

Simon Black, CEO of London-based fintech e-payment specialists, PPRO Group, said: “Given the option, 26% of us would never choose to pay cash when buying an item in a shop. The popularity of mobile and contactless payments clearly demonstrates the acceptance of change when it comes to payments in the UK.”

Unsurprisingly young people are the main age group driving the change. PPRO Group actually conducted research in 2017 that found a third of the UK never use cash anymore and this figure rises to 51% among millennials.

People are now less likely to use cash even for smaller purchases such as a coffee or a beer.

Cashless payments cover a range of payment methods including credit and debit cards. Less cash means more contactless payments. Digital wallets, like smartphones, are exclusively contactless and these are gaining ground because contactless payments are up 147.6 per cent year-on-year.

Digital wallet apps make it convenient to pay instantly from a mobile phone and Colu’s digital wallet uses technology with the aim to empower local businesses in cities. Users can discover businesses and enjoy exclusive discounts through the app, exchanging with merchants and each other. When users top up their digital balance they receive an additional 10% discount and Colu believe this helps the local economy because ‘money spent local, stays local’.

Cash machines are being used less frequently. ATM data for 2016 shows that there were 2.7bn withdrawals from the country’s 70,000 cash machines – the lowest number of transactions since 2010. This amount has fallen in the last few years and in 2016, people withdrew over £6bn less than they did in 2015.

How Can a Cashless Country Work for Everyone?

The UK has around 1.5m people without access to the services of a bank or similar financial organisations, who exist only in the cash economy. Without a current account, how can these unbanked people that could be excluded from transactions be a part of the digital economy?

Raja Rajamannar, Chief Marketing Officer of Mastercard, said it’s important that ‘people who are not part of the financial system can still have an identity’.

Technology has led people towards a cashless society and technology can help guide everyone in the digital economy.

Mark Bryant, Managing Director of PayPal UK, said: “Reimagining traditional financial services to better utilise mobile technology presents a huge opportunity to cut costs and level the financial playing field for both consumers and businesses.”

Helping independent businesses access advanced technological and financial tools is important to Colu. By providing local businesses with a digital toolbox that includes marketing and promotional tools, microloans, advances, a business dashboard and analytics it will help them to cope with economic changes and compete with large retailers.

Government and regulators can help and arguably have a responsibility to take control of the transition, creating a financially inclusive environment to promote moving towards a cashless society. In the 2018 Spring Statement, Chancellor Philip Hammond acknowledged the rapid pace of change in financial technology, launching a consultation to ensure the “economy is fit for the future and keeps up with the changes in the way people pay for goods and services.”

The challenge is not simply reaching the unbanked, but in providing them with products and services that are well-suited to their needs and making clear the benefits of transition.

Without creating a level playing field first, these people are vulnerable as the cashless world approaches and will fear they could be left behind at the bottom of the pile.

What Does It Mean for Businesses in the Cash Economy?

More smaller businesses such as market traders are investing in portable technologies, taking the decision to pay fees so they can offer customers the option of mobile card reading and contactless payments.

However, up to three million small businesses in the UK are still cash-only, and don’t accept card payments. With the PPRO survey saying more than a quarter of people (26.4%) find it irritating when they have to pay by cash rather than by card, can cash-only traders afford the risk of losing business?

Each business would need to consider how this change could work for them. A cashless society would mean no more regular trips to the bank, counting coins and notes every day. Weekly cashing up and banking takes up a lot of time for vendors. There’s also a feeling that a lack of hard money would be safer. Shop owners can feel more comfortable that there aren’t large amounts of money stored in tills or somewhere on the premises.

Businesses that have taken the decision to go entirely cashless must declare everything they accept which sends out a message that they are transparent, not evading tax and willing to contribute. Going cashless will certainly reduce tax evasion and there would be less cash-in-hand payments for different services. 

Customers tend to spend more when using a card than with cash. As well as supporting businesses individually, the bigger picture is that increased spending would help the economy overall. Charities and cultural organisations like the National Gallery who’ve accepted contactless donations have also reported larger donations on average with contactless payments rather than cash. 

If businesses ignore the current statistics and forecasts by remaining cash-only they risk missing out on potential trade and custom. Customer behaviour shows the UK is heading in the direction of spending less cash so individual businesses should decide what works for them, possibly becoming cashless before society makes the decision for them.