The pandemic has killed cash

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The pandemic has been quietly accelerating the steady slog towards a cashless Britain. A decade ago, cash accounted for 58 per cent of payments across the UK. Since then, national cash usage has plummeted – overtaken by digital payments in 2018 – to less than a quarter of all transactions last year. Now, Covid-19 has propelled us into a future where notes and coins are even scarcer.
ATM withdrawals dropped 60 per cent when lockdown began in March, according to Link, the UK’s largest ATM provider. Constituency data obtained from the GMB trade union shows that cash machines are vanishing at a breakneck rate, with an 8.9 per cent drop across the country from April to June. Throughout lockdown 9,000 ATMs disconnected from Link’s network at some point – a result of public places closing during the peak of the first wave, or neighbouring machines being removed to promote social distancing. As of July, only 33 per cent of these had been reconnected. While withdrawal volumes picked up once restrictions eased, figures from as recently as September 20 show that usage is still 40 per cent lower than it was this time in 2019.


Graham Mott, director of strategy at Link, believes Covid-19 is fast-forwarding what would have been happening anyway over the next four to eight years. “People are making fewer payments in total,” he says, referring to a decrease in consumer activity during the pandemic. “But Covid-19 has undoubtedly accelerated the move away from cash for some, as it has accelerated things like working from home. The trends were always there.”
The lifestyle shift over the last few years has been stark. Buskers are perching contactless readers by their microphone stands. Digital payments have permeated across metropolitan borders into quainter pastures. For zoomers, the act of breaking a tenner is often shrouded in the sort of nostalgic charm reserved for sifting through vinyl records. But many cannot afford to see cash go extinct.
Take Eric, a former builder, bus driver, window cleaner, and general labourer. Aged 89, he is deemed to be at high-risk of suffering severe Covid-19 symptoms and has done his best to avoid leaving his house in Wiltshire during the pandemic. But he needs to venture out to get hold of cash. “I only go to the shop or the ATM in good weather because a strong wind could knock me over. Being able to get my money is very important so that I can pay the people that come to my house to help me,” he says. “I have the hairdresser, toenail care, gardener and handyman who all insist on being paid in cash.”
Once lockdown restrictions were imposed, Eric was left without accompaniment to his monthly trip to Sainsbury’s – where he’d gotten the hang of covering his PIN when withdrawing the maximum £300. But deliveries brought little reprieve. “I need to have cash for the delivery driver, so I walk up to the corner shop to get cashback. They only allow £50 per day, Monday to Friday, so I have to go two or three times to get what I need. The shop used to have an ATM, but it was removed because they said it was too expensive to run,” Eric explains. “Another option is for me to travel about a kilometre to the nearest ATM. The bus I’d need to get only runs three times a day, so it means waiting for two hours before I can get the return bus home.”


Eric’s plight is not unique, according to Caroline Abrahams, charity director of Age UK. “Many older people rely on cash. If they’re not online or in an area with poor connectivity, it’s an essential back-up. These are people who need continuing access to a convenient and affordable method that they can trust.”
The glossy vision of a cashless society relies on widespread digital proficiency. As it stands, on its fringes are the castaways: those who cannot, or will not, adequately use technology. Eric finds online shopping complicated and daunting, and his eyesight is no longer up to the challenge. “I’m way behind with technology at my age. Just when I learn how to use something, they change or upgrade it,” he says. Moreover, some villages in Wiltshire are picturesque “not-spots” – pockets of land without mobile network coverage.
But in the age of face masks and plexiglass dividers, exchanging cash is not merely unfashionable: in some cases, it is looked at with suspicion. In early March, a widely cited article misreported that the World Health Organisation (WHO) considered cash a possible vector for Covid-19 infection. Soon enough, retailers began encouraging digital transactions in lieu of cash payments. A Which? survey from June reported that one in ten people attempting to pay with cash were turned down entirely. The WHO has since clarified that there was no official warning against cash, but that it advised the public to wash their hands after handling money as part of practicing good hygiene. Nevertheless, even when debunked, latent apprehension echoes on.
For many businesses that continued to accept cash, it was the consumers who took the leap. Amid shuttering economies, Covid-19 is swinging consumer behaviour largely in favour of cashless options. Data from September shows that half of UK shoppers have not used cash since the pandemic began. An estimated five million people (12 per cent of the UK’s adult population) downloaded a banking app for the first time one month into lockdown. With the rise of online shopping and contactless payments, cash is being swept away.


Charlie Deeley, who owns Big Bakes Bakery in Torquay with her partner, Ryan Bolton, repackaged her family-run independent business into a treat box delivery service to survive lockdown. The reception has been overwhelming. “It started with us advertising local deliveries within three set postcodes. Just a ‘message us on Facebook’ thing. We got over 400 messages for deliveries in the first couple of hours,” she says. The powder blue storefront has seen an influx of local patrons forgoing cash for contactless.
After legislation in April increased the contactless limit from £35 to £45, Mastercard found that two thirds of all transactions in the UK were contactless in May. Likewise UK Finance, a trade association for banks and financial companies, reported that contactless transactions totalled £6.5 billion in June, indicating that while contactless payment volumes have fallen year on year as people shop less, they now accounted for a greater share of transactions.
PayPal, which Deeley’s bakery now uses to manage orders, added a record 21.3 million new global customers between April and July. “People are definitely using cash way less. We reopened the shop at the beginning of July, it’s been super, super busy,” Deeley says. “We don’t have massively high-priced items, between £2 and £5 for a few cupcakes, they would normally be cash transactions. But now, 90 per cent of people use card. Contactless, mainly. That’s a huge change from the beginning of the year.”
That change might not be as readily embraced by everyone. A large chunk of the UK’s GDP, 12 per cent by some estimates, is made up by self-employed workers and tradespeople – cleaners, nannies, builders – often described with the catch-all label of “informal economy”. Many of these people are unbanked or earn cash in hand. With the country officially in recession, and approximately 9.6 million jobs currently furloughed, budgeting will become a particularly salient issue in the upcoming years. “Vulnerable customers, which includes those on low incomes managing tight budgets or [who] have been excluded from the banking system, rely on cash to budget and manage their payments,” Mott says. “To date there doesn’t appear to be a technical solution which matches cash for its ubiquity, cost, anonymity and tactile nature.”
Never before has the future of cash been so dependent on a single, albeit towering, factor. Covid-19 is pushing cash down a slippery decline, but many continue to campaign for those who fundamentally depend on it. In his March budget, chancellor Rishi Sunak pledged to safeguard access to cash. The Community Access to Cash Pilot initiative launched this week to keep cash a sustainable option for vulnerable communities across the country. Cash is going through a rough patch, but ATM withdrawal amounts are increasing on a weekly basis. As the UK stares down the barrel of a second lockdown, Mott is optimistic. “The fundamental requirements for cash, for some, remain,” he says. “It will therefore be required and around for a long time to come.”
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