6:54 AM 6th November 2021
Bank Of England State: 'Cash Remains As Important As Ever'
In a foreword to Volumatic’s ‘Consumers Demand Payment Choice’ white paper on the impact COVID has had on cash in the UK, Bank of England’s, Head of Future of Money Division, Nick Butt, states cash remains as important as ever.
“For a significant portion of society cash remains as important as ever, arguably more important,” Butt states. “For 21% of the population cash remains the preferred payment method. There are 1.2 million people who have limited access to banking services and 3.8 million in financial difficulty for whom cash can be an essential budgeting tool. Cash remains important for many across society – we see this across geographic, socioeconomic, and age groupings.
“While the amount of cash withdrawn from ATMs fell, reflecting greater online shopping and use of cards, the average ATM withdrawal increased. And while the payment share of cash has declined further, the total number of notes in circulation has risen, with £82.8 billion notes in circulation at the end of June 2021, the highest level on record.
“Some of the changes in payment preference may be short lived. Concerns that banknotes might transmit COVID may have reduced as immunisation has been rolled out, and our research shows that the risk of COVID transmission via banknotes has always been low, and no higher than for other commonly touched surfaces.
Nick Butt also stated: “At the Bank of England we support choice in payment preference. Cash is, and will continue to be, an important payment method for some, and we are committed to meeting the public’s demand for cash.”
Consumers Demand Payment Choice
Over the last 18 months, leading cash handling supplier Volumatic has been gathering consumer research on the effects of COVID on cash in the UK.
The ‘Consumers Demand Payment Choice’ white paper articulates that: “While technology offers a wider payment choice, cash has still remained a prominent payment choice in the last decade. Cash remains the second-most frequently used payment option, accounting for 9.3 billion payments per year in the UK. In the last five years, the value of cash in circulation has grown from £60 billion to just under £70 billion demonstrating that we are far from a cashless society.
The white paper supports the Bank of England’s introduction and states that consumers need alternative payment methods. “45% of consumers say that the main reason they are not using cash is that retailers were not accepting cash. Cash is safe. At no point did the World Health Organization issue a warning around banknotes. Retailers began encouraging contactless payment to increase the speed of transactions and to cut queue times at checkouts.
Image by Pete Linforth
“It is becoming more apparent that consumers are being denied the choice to pay with cash which is causing the decline, rather than consumers choosing to move towards a cashless society. For retailers, by eliminating cash, you may be excluding a large proportion of your customer base,” the white paper reports.
The white paper also reveals the harmful impact an on-going cashless society can have on consumers and businesses. Volumatic states that 60% of businesses still maintain that cash is an essential payment option and 77% of businesses believe in the importance of payment choice. “Payment choice not only helps consumers to have control over their finances but also offers businesses a backup should there be an issue with payment,” it said.
“The focus should shift away from cashless, but towards payment choice. Over half of businesses believe they would suffer if they didn’t accept cash.”
Along with optimism for rebuilding the high street, Volumatic reveals that there has also been a renewed optimism for cash as a payment method. 40% of businesses surveyed by Enryo, an independent financial services consultancy, say that cash will form an essential part of the high street recovery post-lockdown. Furthermore, 41% of people say they don’t intend to change how often they use cash, and 12% say that they plan to use cash more.
“In order to create a resilient cash infrastructure, we need to ensure there are improvements throughout the supply chain. For cash to remain safe, accessible and efficient changes need to be made to the cash cycle.”
The UK’s biggest cash processor, Vaultex, states that 60% of consumers experience difficulty with coin devices and 36% of consumers experience difficulty when their usual store went cashless. Other issues affecting the cash cycle include limited and reduced banking services, and Post Office closures. For businesses throughout the pandemic, 20% of SMEs have experienced cash shortages for giving change.
78% of retailers polled by Volumatic are demanding smarter payment solutions from the cash supply chain. Volumatic conclude that: “We are helping retailers and consumers find a robust cash future where cash can remain a vital and viable payment choice. It is impossible to ignore that cash is important to consumers going forward and businesses need to adapt their strategies to support this.”
James Harris, Managing Director of Volumatic added: “As thought leaders in the cash handling community, we felt we had a duty to help our customers make sense of and deal with the extraordinary circumstances around COVID-19. We found many of our customers in the retail and hospitality sectors were struggling to sort fact from fiction and genuinely did not understand how to deal with the challenges of the pandemic in relation to cash in their businesses. We hope our findings will be useful to all.”