The very quick rise of contactless card payments haven't come without some issues ....
....one of which is that those who were bad with money before, have now found their control over expenditure even less firm.
In fact contactless payments have become so popular among UK consumers, that they accounted for half of all debit card transactions for the first time, in July 2019, when it was the preferred payment method for 647 million transactions on debit cards during the month. Its currently expected that by the end of 2020 the value of the UK's digital transactions will exceed £400bn a year.
A poll by the researchers of the University of West London found that one in five UK adults under the age of 45 are struggling with debt after reckless spending. In fact so bad has this situation become, that a similar number of people in that age range, are considering switching back to cash only transactions to try and control their finances.
However they may not be able to do this for much longer as there is also another risk arising from the use of credit cards and contactless payments .... that is to cash itself. Yes there are now a number of studies and reviews that have prophesied that cash may simply disappear in many developed economies. Not because governments will stop printing cash, but because the infrastructure that allows cash to be used will not be maintained with free market forces.
In fact so dire is the situation that its predicted that the current rate of decline in acceptance of cash, driven primarily by retailers and other businesses refusing to accept cash (owing to the cost of handling it), would mean cash use could end as early as 2026. However that's the extreme estimate, most reports suggest that notes and coins would still be used in 15 years' time, but only accounting for between 10% and 15% of transactions. This would make cash transactions effectively unviable ... Britain's cash infrastructure costs around £5bn a year to run and is paid for predominantly by the retail banks and run mostly by commercial operators, who would no longer be incentivised by profit to maintain it.
For context, its estimated that in the UK, banknotes and coins are still a necessity for eight million people, with poverty as the biggest indicator of cash dependency, not age, although as a WHICH campaign has indicated, availability of ATMs, especially free ones, is also an issue in many poorer or rural economies.
There are now calls on the government and regulators to step in to ensure cash remains viable.
Suggestions Include:
This blog has noted before that many in the UK have built their lives on very shaky financial foundations, and this may well become even more shaky in the next decade or so.
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| Contactless Is King ..... |
....one of which is that those who were bad with money before, have now found their control over expenditure even less firm.
In fact contactless payments have become so popular among UK consumers, that they accounted for half of all debit card transactions for the first time, in July 2019, when it was the preferred payment method for 647 million transactions on debit cards during the month. Its currently expected that by the end of 2020 the value of the UK's digital transactions will exceed £400bn a year.
A poll by the researchers of the University of West London found that one in five UK adults under the age of 45 are struggling with debt after reckless spending. In fact so bad has this situation become, that a similar number of people in that age range, are considering switching back to cash only transactions to try and control their finances.
However they may not be able to do this for much longer as there is also another risk arising from the use of credit cards and contactless payments .... that is to cash itself. Yes there are now a number of studies and reviews that have prophesied that cash may simply disappear in many developed economies. Not because governments will stop printing cash, but because the infrastructure that allows cash to be used will not be maintained with free market forces.
 |
| Cash Isn't King Any More ..... |
In fact so dire is the situation that its predicted that the current rate of decline in acceptance of cash, driven primarily by retailers and other businesses refusing to accept cash (owing to the cost of handling it), would mean cash use could end as early as 2026. However that's the extreme estimate, most reports suggest that notes and coins would still be used in 15 years' time, but only accounting for between 10% and 15% of transactions. This would make cash transactions effectively unviable ... Britain's cash infrastructure costs around £5bn a year to run and is paid for predominantly by the retail banks and run mostly by commercial operators, who would no longer be incentivised by profit to maintain it.
For context, its estimated that in the UK, banknotes and coins are still a necessity for eight million people, with poverty as the biggest indicator of cash dependency, not age, although as a WHICH campaign has indicated, availability of ATMs, especially free ones, is also an issue in many poorer or rural economies.
There are now calls on the government and regulators to step in to ensure cash remains viable.
Suggestions Include:
- All rural shops to offer cash-back to counter the loss of cash ATM machines. This is an issue that particularly affects rural areas where not only are free to use ATMs disappearing, but even charging ATMs are fast disappearing as bank branches close. The consumer group WHICH is currently campaigning on the issue of ATM's.
- All essential services, such as utility and council bills, should still allow customers to pay in cash.
- That an independent body (funded by the banks), should be set up that is tasked to step in and act if local communities were running short of access to cash in shops and ATMs.
- Small businesses to be given the opportunity to deposit cash in secure lockers or "smart" ATMs, rather than have to make a weekly trip to a bank branch.
- Reform of the infrastructure behind cash, overseen by the Bank of England, to lower the cost and maintain free access for consumers.
This blog has noted before that many in the UK have built their lives on very shaky financial foundations, and this may well become even more shaky in the next decade or so.
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