It is undeniable that the digital transition has impacted cash usage heavily, and physical notes remain a popular means of payment across various countries. The extent of this is debated extensively by policymakers, regulators and businesses.
In the UK, the Treasury Committee, a cross-party group of MPs tasked with scrutinising the work of HM Treasury and HM Revenue and Customers (HMRC), has opened a call for evidence on whether rules are needed to govern the use of cash.
MPs cited that over 3.1 million people in the UK rely ‘almost entirely on cash’ as a form of payment, with groups such as those facing long-term health issues or people at risk of economic abuse making particular use of paper currency.
Separately, an international study by PayComplete, a cash management solutions company, suggests that cash still has a strong place in contemporary payments. The study, titled ‘Why Won’t Cash Just Die?!!’, surveyed 5,000 consumers from the US, UK, Germany, France, Italy and Spain.
The survey concluded with 69% of respondents stating that they ‘always have cash on them’. PayComplete has also sought to dispel what it believes are ‘rumours’ around age disparity in cash usage, with younger generations seen as more likely to use digital methods and older generations more likely to use cash.
According to the study, 33% of cash users fall within the 25-44 age range and 60% fit into mid-range income brackets, making between £19,000 and £63,999 annually. The report asserts that businesses which fail to offer cash as an option risk losing sales and customers, citing that 47% of customers bandom in-store purchases when they can’t pay in cash.
“All the noise around the death of cash is just that,” said Simon James, CEO of PayComplete. “While digital and electronic payment providers have been quick to kill and downplay the importance of cash in consumers; lives, our research shows it continues to hold a significant place in the payment ecosystem, customer satisfaction, and in maintaining and strengthening communities.”
Differing views on generational preferences
PayComplete is particularly assertive that Gen Z customers remain fans of cash, despite other surveys and general popular belief suggesting this demographic prefers at least debit or credit cards if not mobile payments and digital wallets.
The firm’s survey puts cash as the most important payment method for Gen Z, with 29% putting it in first place followed by debit cards. Outside of Gen Z, it is the second most popular payment method across all age groups, whilst among the 24-25 age group it and debit cards are on an equal footing at 19%.
This data does go against some trends observed by other surveys, however. For example, Payment Expert spoke with GoDaddy last month about generational payments habits, with the domain registry citing data from its own surveys of businesses which put digital payments at the forefront among Gen Z.
In contrast to PayCompelte’s survey, which states that businesses that do not offer cash run the risk of losing customers (including Gen Z ones), GoDaddy data suggests that businesses which do not offer digital methods run this risk instead.
“Based on our survey, half of Gen Z said they prefer paying via Tap to Pay when using a debit or credit card,” said Hari Vasupuram, Director of Commerce Product Marketing at GoDaddy.
“Our internal data shows that our customers who use GoDaddy Payments for their online store see more than a 10% increase in sales due to offering Apple Pay or Google Pay.
“Small businesses that do not accept digital wallet payments run the risk of pushing potential Gen Z customers away. One in 10 Gen Zers say they rarely or never carry a physical wallet, so small businesses need to remain flexible and open-minded as Gen Z preferences gain momentum.”
Perhaps a happy middle ground can be found with businesses simply offering both cash, debit cards and digital payment methods. Offering the widest range of payment methods seems like the easiest way of keeping all consumers across all demographics and income brackets satisfied and on side.
Back in parliament, the MPs of the Treasury Committee have noted some issues with the decline in cash usage in Britain. The Bank of England (BofE), the country’s central bank, has apparently noted increasing infrastructure costs from retaining physical cash as a viable payment method.
Payments outages hitting businesses and banks earlier this year also led to some questioning a perceived overreliance on digital and contactless payments. Back In July, customers at Asda, Sainsbury’s, Marks and Spencer and McDonalds were left frustrated by Visa and Mastercard card outages.
Some banks too have noticed an increase in cash withdrawals. Nationwide stated towards the start of the year that it was seeing more cash withdrawals, citing the costs-of-living crisis – some people may find it easier to budget with physical cash in their hand rather than looking at numbers on a screen on their phone or computer.
There are currently no regulations which require businesses to accept cash in the UK, and customers have become increasingly used to some businesses sporting ‘card only’ signs, though there is an argument that independent businesses benefit from cash usage due to the absence of the fees present on card transactions.
Though the Treasury Committee is not a government body and therefore does not have as much direct influence over policy, it can still influence legislation. Should the Committee’s inquiry find substantial evidence, its MPs may suggest a bill to parliament introducing tighter and/or clearer rules around cash.
