News : The end of cash?
The use of cash in the UK continues to decline as more people turn to alternative forms of payment. With rumoured plans of the UK banks to start charging for the use of cash machines, the decline of cash will only accelerate.
The major UK banks, Barclays, NatWest, Lloyds, Santander & Royal Bank of Scotland are wary of being the first to start charging but the economics suggest that it is not a question of if, but when.
Transactions using cash have fallen from 73% in 1999 to 59% in 2009 and predicted to fall to 45% by 2018. This fall has been encouraged by a huge reduction in the number of workers who are paid in cash, as many as 12.5% were still paid in cash in 1999, by 2009 this had fallen to 5% and by 2018 just 2% are still expected to be paid in cash.
Paperless methods of making payments are increasingly popular with direct transfers between accounts now the most common method after cash, this option is followed by debit and credit card usage.
Paying by cheque has also fallen, accounting for just 2% of transactions in 2009, this is expected to fall to 0.8% by 2018 with the future of the cheque very much in doubt.
Cash is an expensive form of payment for economies to absorb and of course with cash being favoured by criminals, governments and commercial organisations are not against the move away from cash.
High denomination notes are associated with criminal usage hence the reluctance of many people to use £50 notes and the UK has banned the use of €500 notes after the Serious Organised Crime Agency (SOCA) estimated that 90% of them were being used by criminal gangs.
Mobile cash is expected to replace cash in many transactions, most mobile payment services are currently restricted to £15 per transaction but these methods are set to become more common as the number of outlets that accept this form of payment increases.
In the Netherlands, several supermarkets are considering becoming completely cash free by 2014 in an attempt to reduce cash handling costs and reduce security risks which the use of cash brings with it.