The cost of living crisis that has impacted the UK has seen the population revert back to withdrawing and holding cash as a means of saving money.
This comes after the UK Post Office revealed that people withdrawing cash is 20% higher than what it was last year, with a total of £801m withdrawals from 11,500 Post Office branches last month alone.
These findings heavily imply that the UK population is opting to use cash as a money saving tool due to the increasing rise intensifying cost of living crisis.
However, ACI Worldwide’s Head of Real-Time Payments, Craig Ramsey, offered a digital alternative to money saving, as he highlighted real-time payments provide similar traits to debit cards as they can both avoid relying on credit.
He explained: “Consumers don’t have to go back to cash to control their spending during the cost-of-living crisis. Faster payments (such as real-time payments) and debit cards are very similar to cash, in that you can avoid relying on credit.
“While some may be returning to cash to see exactly how much money they have in hand, this isn’t the only way to prevent temptation to spend. There are free real-time payment options, including mobile wallets, which can help with both security as well as savings – as there is no need to carry cash – while giving consumers a real-time picture of their finances in a single, easy-to-access place.”
Before various macroeconomic issues severely affected economies across the globe, digital payments from a range of fintech firms were expected to flourish as they have done in the wake of the COVID-19 pandemic.
According to an ACI real-time payments report, the share and volume of real-time payments non-paper based transactions in 2019 was at 7%, but projected to accelerate up to above 9% by the end of 2022.
There is no clear indication how the cost-of-living crisis will affect the growth of digital and real-time payments but according to the Post Office, it is clear that the UK population is growing more fond of holding cash as opposed to storing and spending their money via digital payment methods.
Chair of the Cash Action Group, Natalie Ceeney, told the BBC recently: “Cash has been in decline for well over a decade, the pandemic accelerated this, but now it’s going back up, and that’s absolutely because of the cost of living crisis.”
“People will be taking out cash and physically putting it into pots, saying ‘this is what I have for bills, this is what I have for food, and this is what’s left’.
Despite the increasing adoption of cash falling back into society again, Ramsey also calls on the government to support and provide knowledge to the public on more payment methods that can be used to better save money.
“We must see further support from the government and banks to educate those reticent to move away from cash, and explain why switching to digital payments can benefit them in the long run,” remarked Ramsey.
“Driving more digital payments actually leads to fairer access to cash and payments for those thought to be at the greatest risk, while simulating the economy itself.”