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The Future of a Cashless Society

The Future of a Cashless Society


Abdullah Abdelkafi


22 Apr 2020

Read time

5 minutes



At the beginning of 2020, Britain was on course to become a cashless society ‘within the next 10 years’. The continued impact of the Coronavirus pandemic will likely accelerate the UK into a cashless society much quicker than originally predicted. This digital transformation stands to change how we spend and receive cash, with increased online and card payments and even the rise of digital currencies. But, we’ll get more into that later, first, we’ll look at how the use of cash has been declining.

The Decline of Cash

Despite a gradual decline in cash usage, it’s still a popular choice of payment method. According to the Bank Of England, there is 70 billion pounds worth of notes in circulation, which’s double the amount that was in circulation a decade ago.
As you can see below, the decline of physical cash as a payment method plummeted around 2012 and has since continued on a downwards spiral. Cash usage was down 16% from 2017 to 2018, while debit card use was on the rise.


Contactless payments on debit cards were once used primarily by young adults. Over time, older consumers have adapted to technology, some of the biggest rises within previous years were among pensioners. In fact, contactless card payments grew to an all-time high in the UK in 2020 with 64% of all debit card transactions being contactless. Now, around 1 in 10 people say they hardly ever make cash payments. UKFinance predicts that more than 90% of transactions will be digital in less than a decade.

Initially, they had predicted going cashless by 2035, but the rise of mobile and contactless payment methods meant that the use of cash declined faster than expected. While some predictions stated we’d likely be a cashless society within the next 10 years, others predict that the UK could be cashless as early as 2028. At the rate cash is declining, coins and notes could account for just 1 in 10 transactions according to government studies.

The reasons for this decline is obvious, cashless transactions provide convenience. However, a new element was added to the mix in 2020 which is likely to accelerate the decline in cash transactions; hygiene.


Will Coronavirus Accelerate Us Into A Cashless Society?

Payment markets have proven to evolve slowly over time, proving that people are creatures of habit. Once we’ve found a set of payment methods that we are comfortable with and one that we find easy to manage our finances effectively, it can take a great deal for us to change to a different method. COVID-19 was a catalyst that caused a big change for many consumers around the world. But, could it prematurely induce a cashless society?

There was public concern that Covid-19 was being transmitted by cash. Scientific evidence suggests the risk is low when compared with other frequently touched objects such as PIN pads. However, there’s no denying that Covid-19 could be transmitted by cash.

The World Health Organisation was advising consumers to avoid handling banknotes and to instead switch to contactless payments. The WHO later said that the advice was not a formal warning, but there was then a flurry of moves to discourage cash usage, such as some countries raising their contactless payments limits.
At the outset of the pandemic, central banks across the world took appropriate precautionary steps. The People’s Bank of China, for example, started to disinfect banknotes in the most virus-affected regions. In the UK, cash usage halved in just a few days, although this was partly due to the Government’s imposition of a nationwide lockdown on freedom of movement over the last year.

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The bottom line is that coronavirus will change some people’s attitude and payment behaviour towards handling paper money and coins. Data shows this change has already happened, but just how much has this affected cash withdrawals?

LINK is the UK’s largest cash machine network. Every cash machine and ATM in the UK is connected to LINK, which means they have data on the number of cash withdrawals made. This enables great insight into how much cash the UK is using.

Each year transactions follow a similar pattern. At the beginning of the year, transactions are usually slow, but there is then usually a spike in February. As you can see below, this year, coronavirus caused a drop like never before.

To put this into perspective, you can see below that there was an 18% decline in LINK transactions during the week ending the 23rd of February. Fast forward to the week ending April 12th and transactions have declined to 60%. These types of figures just haven’t been seen before, each year there is a pattern that transactions follow. This provides insight into just how much the coronavirus has already affected UK cash usage.

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To put this into perspective, you can see below that there was an 18% decline in LINK transactions during the week ending the 23rd of February. Fast forward to the week ending April 12th and transactions have declined to 60%. These types of figures just haven’t been seen before, each year there is a pattern that transactions follow. This provides insight into just how much the coronavirus has already affected UK cash usage.


Andy Boothman, founder of DressCode shirts

“I believe coronavirus will accelerate us into a cashless society. Over the past decade, cash transactions have declined by 50%. This trend was predicted to reduce further, towards 10% by the end of the current decade. Coronavirus has most certainly accelerated this process with 2 major tipping points. The first being physically dirty money and the second being the rise of contactless limits.
Both coins and notes are forms by which the virus can migrate. As a result, we have seen the introduction of ‘contactless only’ at many retail points. This has been further amplified by the wearing of gloves for all handling of goods within these environments, heightening the ‘unclean’ connotations of everything including physical money.

The rise of contactless limits was already planned, but the arrival of COVID-19 fast-forwarded the rise of the payment limit. Adding a very useful 50% transaction capacity to the contactless system across 29 countries, in the UK, that means you can now buy items up to the value of £45.

In recent weeks we have all had to adopt new ways of living, contactless payments have been central to almost everyone’s way of life and are now seen as the way to stay safe. As people grow more familiar with this system and they realise the safety and security of the global payments the previous concerns are rapidly fading, proving to be simply untrue.

Digital money is cleaner, physically cleaner as mentioned above and more importantly cleaner in terms of money laundering, with every transaction recorded and traceable. This traceability seems to upset some people, with accusations of a ‘big brother’ mentality, when in fact banks already have full access to your spending habits and transactions through your bank and credit cards.”

Sweden aims to become the first cashless society

The future of a cashless society is being shaped by Sweden and other Nordic countries. Sweden is one of the most technologically advanced nations in the world and they are certainly leading the way. In fact, they are expected to become the world’s first cashless society by March 2023, after that cash will not be accepted as a means of payment.

It’s no surprise that Sweden is aiming to become the first cashless society, as they were the first European country to adopt banknotes back in 1661. Both banks and the government encourage Swedish citizens to adopt the cashless economy.
Swish, the mobile payment system, is very close to becoming the Swedish standard for mobile payments. The app is used by over half of the population in Sweden already and only only 13% of the total population in Sweden rely on cash.

Children are also part of the transition and some of them will never know of a world where cash transactions are widely accepted unless they travel. Swedish banks issue debit cards to citizens aged seven years onwards with parental permission, which translates to more than 97% of the population. This introduces them to the cashless society early on, eventually, this will be their future. More than 99% of Swedish merchants and retailers accept debit cards.


Less contact during payments

As we begin to enter the post-COVID-19 period, it’s expected that the use of touch screens will reduce while the use of voice interfaces and machine vision interfaces will increase to reduce the number of shared surfaces we touch.

Before the pandemic, we saw the rollout of contactless payment options through mobile phones. These mobile payment services and mobile wallets like Apple Pay provide secure, cash-free payments. However, this could still be just too much contact. With the increase in people wanting to limit what they touch, an option to pay for goods and services that do not require any physical contact is likely to become popular.

This could mean looking further into technology such as machine visions interfaces. Machine vision interfaces are already used today to apply social media filters and to offer autonomous checkout at some stores. There is room here to develop current technology that recognises faces and gestures. This would almost remove the need for any physical contact.


Cryptocurrency has become an increasingly popular payment means over the years and many have pushed for it to become a widely used currency. Some American companies even started paying their employees in cryptocurrency.
However, there are risks with cryptocurrencies as the values can fluctuate within a short time, leaving investors vulnerable. In addition, cryptocurrency exchanges are digital, and therefore vulnerable to hacks or even operational glitches.
In addition, government reactions to cryptocurrencies have ranged from aggressive to indifferent. While some countries are celebrating their use, such as El Salvador, others are limiting the trade of cryptocurrencies, such as South Korea. China has recently announced a crackdown on the cryptocurrency mining industry.

Katharine Wooller – Managing Director of Dacxi UK and Eire

“Crypto is no longer waiting in the wings to become mainstream – it is leading the way. As an example, Bitfinex recently made a $1.1bn BTC transaction at a cost of $0.68. COVID-19 provides the perfect storm, a once-in-a-generation event, to bring a new dawn. Extraordinary events often create ordinary returns, and there is an unprecedented need to think out of the box, and thus willingness to diversify. With the switch from cash to crypto being previously limited to millennials, we now see the 40+ age bracket including the “blue chip” digital currencies (Bitcoin, Ethereum, Litecoin) in their investment strategy.
Certainly, recent events support that different assets respond differently, and many cryptocurrencies, at the time of writing, have recovered faster than traditional asset classes and therefore look comparatively positive for retail investors.

Indeed, there are increasing amounts of mainstream analysis that bitcoin will enjoy a run to $100k in the relatively near future.

Only a small percentage of institutional money being diverted into crypto will have a hyperbolic impact on prices. Higher prices will always attract more money.
As Bitcoin’s dominance continues to rampage (64% of total market cap), there is much talk of this ‘Digital Gold,’ as a safe haven. Many analysts suggest that the forthcoming May bitcoin halving will cause a mini-boom.

We live in interesting times; rarely has the pace of change been so riotous. Much has changed in the financial zeitgeist in recent months, in my view, there is no going back.”

Problems With Going Cashless

Like with any big change, it won’t be easy and there will be many problems that will need ironing out. There is a risk of millions of people being left behind with the shift to a cashless society. There are still many people who are unable to make digital payments because they don’t have a bank account, credit card, debit card or smartphone. These people are known as the unbanked.

In addition, there are still those with bank accounts who use a very limited number of financial services or those who don’t have the understanding to make use of new digital payment solutions, such as seniors. This issue is compounded with the move towards online banking, which is seeing many bank branches closing across the country, potentially leaving those who aren’t comfortable with online banking or require support behind.

Consumers typically use cash for small transactions like gifts and donations. They also use it to pay tradespeople, rather than for larger payments like bills or holiday bookings. In addition, a survey revealed that Brits liked having cash available ‘for peace of mind’.

Much of this piece of mind mentality may come from the fact that, unlike Sweden, many merchants, such as small-town independents still don’t offer card or contactless payments. It will, of course, be an easier switch for some than others.

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Justin Basini, money and finance expert and CEO of ClearScore provides some insight:

“The move towards a cashless society, while of course providing benefits, poses certain problems.
To understand finances we need to make money less abstract. Anything that isn’t concrete is harder to understand and so to take away money would be detrimental to the future understanding of finances and money.

To look at this from an early-stage understanding of money; if the UK becomes a cashless society then there is a real danger that cashless systems will be introduced in schools, giving credit allowance on debit cards and apps. Spatial awareness is key to learning and so to digitise this aspect and to view money as something abstract will create barriers to understanding money which is the building block to understanding finances.

Of course advances in technology do help people to engage with their financial lives but real money also plays an important part in this.”

In Summary

Whether we like it or not, a cashless society is on the horizon. The discussion remains focused on when we will see the UK become completely cashless. Many of the experts within the article touched on the need for a big change to push us over the final hurdle. It’s undeniable that COVID-19 is the big change we needed to encourage more merchants to go cashless.


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