The rise of contactless payments and chip-and-pin has gone into reverse. New figures reveal that more of us prefer to use hard currency – whether because our accounts are empty or because we prefer the security of coins and notes
Is there anything more infuriating than standing behind someone at the Co-op who is paying for a pint of milk, a loaf of bread and a copy of the Racing Post with a card? What is wrong with handing over a fiver? Why do they insist on making endless attempts to key in their pin rather than make sure they have a few quid in their wallet?
The reason is that they have accepted the banks’ propaganda that we will soon live in a cash-free world where everyone will happily use chip-and-pin and contactless cards for everything. The world, they assure us, will be our Oyster, ignoring the fact that plenty of people are suspicious of smartcards and rather like the security and physicality of cash. What the banks are really doing is evangelising for their own convenience. They want a world in which all their affairs can be conducted by three employees in a windowless office in Runcorn. No more branches, no more tellers, no more old-fashioned human contact.
Happily, so far they are being thwarted. The British public has fought a fierce rearguard action to save cheques, and now we seem to be reversing the apparently relentless rise of plastic too. According to a new report from the Payments Council and Link, which runs the UK’s cash machines, the volume of cash payments rose by 200m in 2012, reversing the year-on-year decline over the past decade. “Cash is still a vital part of our day-to-day lives,” declares David Hensley, head of cash at the council, with a hint of triumphalism. “More than half of all our payments are in cash, reflecting its easy use and its wide acceptance.”
The report reckons the recession is a key factor in the surprising comeback of cash. “More people are turning to cash exclusively, possibly to help them monitor the amount they are spending on a day-to-day basis,” it says. “In 2012, 7.2 million adults made all of their day-to-day purchases by cash, an increase of around 700,000 compared with 2011.” That is perhaps the most telling statistic of all: some people are now so broke that they have no reserves to fall back on and are forced to get by day-to-day on whatever cash they have.
“Cash is still king in low-value transactions,” says Payments Council spokeswoman Jemma Smith. “There are also lots of situations where people feel much more comfortable paying in cash – making a person-to-person payment, or paying a sole trader, for instance.” The latter are just the sort of situations in which some would like to see us stop using cash. Not just the banks, but even members of the government dislike the anonymity of cash – the very thing users often like about it. Treasury minister David Gauke said last year that paying a plumber cash in hand was “morally wrong”. He was assuming the plumber would not declare the money for tax purposes. Cue a feeding frenzy in which every prominent politician was asked whether they had ever paid a plumber cash in hand. Most, including Messrs Cameron, Clegg and Cable, admitted they had.
Smith says the 2012 figures could be the start of a trend towards greater use of cash, but only in the short term. “If contactless technology and mobile payments take off and the economy recovers,” she says, “we would expect cash usage to start to decline again.” Yet there is something deep-seated about our need for physical money, something that goes beyond the exigencies of the recession. For better or worse, cash seems to be something we celebrate culturally. On Come Dine With Me, the winner has a platter with a fan of cash on it, which they customarily throw around. Last month Sunderland footballer Phil Bardsley got into hot water with his manager Paolo Di Canio when he was photographed lying on the floor of a casino covered in £50 notes. While the poor have to resort to cash, the rich feel the need to flaunt it.
Cash has been written off for decades, maybe even centuries. The Persians first used cheques 2,500 years ago, and no doubt there were lots of early adopters then insisting the coin’s days were numbered. In 2007, Keith Cottrell, the then director of circulating coin at the Royal Mint, told me that on the first day he started in the business back in the 1970s, working for a company that printed bank notes, he was encouragingly told: “You do know you’ve joined a dying industry.” He managed to spend his entire career in it.
The security, physicality, cultural resonance, even aesthetic appeal of cash will ensure its survival, no matter how much banks or politicians want us to lock into their easily tracked electronic systems. “No one would be foolish enough to think cash would ever die,” says Smith. “Technology is changing things, but there is no drive to do away with cash.” Cash offers freedom, power, security and self-satisfaction, though lying on the floor of a casino amid a pile of £50 notes is probably a bit OTT.
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