Is the use of cash dying out?

[Bread & cheese]

Martin Vander Weyer, a former banker who writes a column for The Spectator, has argued that the switch to cashless payment is a factor in inflation. Here is an excerpt from his column from the 9 July edition:

Do you take cash?
In the search for reasons why the UK may face worse inflation than other developed economies, I'll take a lead from Sir Keir Starmer (not a phrase I use often) and shut up about Brexit: instead, let's look at the impact of the decreasing use of cash. How closely do you scrutinise the price on the terminal in any card-only shop or café to check whether it has gone up since last week? In Japan, inflation remains very low and cash use remains high, the 1,000 Yen note (worth €6) setting a firm benchmark for the price of an office worker's lunchbox.
In Sweden, by contrast, inflation at 7.3 per cent in May was below ours at 9.1 per cent but cash is almost extinct - so I may have proved nothing so far except that the Swedes are generally more sensible than we are. But some things are for sure: the switch to card-only payment encourages consumer debt, makes it harder to track household spending, disadvantages the unbanked poor, creates data trails we might prefer not to leave, exposes us to cybertheft and computer outages and certainly makes it easier for merchants to raise prices at will.
Hence I regard it as my continuing duty to ask 'Do you take cash?' at every possible occasion - and to help youngsters polish their arithmetic by offering odd cash amounts that complicate the change calculation. All these thoughts were prompted by a card-only admonition in a posh bar at Wimbledon, evidently in this respect no longer a bastion of tradition. 'I only wish we did take cash, said the polite server. "These stupid machines break down all the time.'

 

[Bletchleyite]

Its called under the mattress!

People seriously do that?

 

[Dai Corner]

This one is a little misleading.

If you are concerned about keeping track of spending then receipts are key.

I've tried numerous apps and programs over the years and they all have their own pitfalls. In this "modern" banking era you can track spending directly from your banking app or bank website. However, the information is pretty generic; sometimes very confusing. If I look through my app I see a load of transactions but when you click each on the merchant name and even location often doesn't match where I spent the money.

I went to a pub recently and my app flashed up "Harvester" I was certainly NOT in a Harvester.

I bought some shoes a few years back and the purchase came up in Luxembourg. The bank phoned me with a concern but it was because that's were the shoe shop (retail store) runs their transactions through.

I have two transactions in my statemwnt for this week. One in Eastbourne and the other in Birmingham. I have only been outside the M25 once this week (neither of those) !

My Google Wallet shows me the time and location of in-person transactions and even displays a map. I think it uses GPS to determine the location, rather than the address of any central processing facility.

 

[Bletchleyite]

I wonder if me and @ComUtoR went to the same pub (the Riverside bar at the Scafell hotel in Borrowdale) in the Lake District that wrongly shows on Monzo as a Harvester, as that's the only place I've had that? I think it is because it once actually was one.

 

[DelayRepay]

People seriously do that?

I don't think many use the mattress but I do have a secret hiding place at home where I keep a small amount of cash (GPB and some left over Euro notes), my passport, credit cards that are not in use and a couple of other valuable items. Obviously I am not saying where it is

When my grandad died and we cleared his house, we found little envelopes of cash hidden all over the place. We has to be very careful when disposing of furniture when we discovered he liked taping envelopes of money to the bottom of drawers etc. I don't think even he would have known where all his cash was - some of the notes went out of circulation years earlier. In all we collected up about £3,000 - which was about the same amount that he had in the bank. I think the oddest hiding place was £200 in a bucket in the shed, discovered by a neighbour who was interested in some of his gardening tools.

This was, however, quite a few years ago when use of cash was more common generally.

 

[Gloster]

A few years ago a woman in Israel treated her elderly mother to a surprise and bought her a new mattress, taking the old one to the dump. The old woman had put all her savings in the mattress, which took the edge off the happiness of the moment.

 

[judethegreat]

Not following this thread, but as it was in "New posts", just thought i'd say i've recommenced regularly using cash again in the last few weeks (the stumbling block to doing so sooner was forgetting to go to a cashpoint first...). Due to often being a bit fumbly as i get used to it again, i'll say to the cashier "sorry, i've only just started using cash again...", and every single time they have been in total agreement with my decision. For the record, it has been mostly Co-ops and small independent stores.

 

[Bletchleyite]

At risk of pushing this into the COVID forum, a lot of people who prefer cash stopped using it because they felt it posed a risk to their health (often older people who felt at greater risk). Now that is felt by most to have receded, they'll be returning to their preference of cash. So I'd not read too much into that increase.

 

[judethegreat]

Just posting that to share my experience that staff, and in some cases it would have been the manager, in shops are extremely happy to handle cash.

 

[Gloster]

I think that some contributors miss the point. It is not a matter of how easy cash or card make it to keep track of what you have spent. For those on the minimum it is a matter of being able to actually have the money to buy those little luxuries like bread or milk. If you know that you will need to buy a loaf at £1 and milk at 90 p. before you next get paid, you can put £1.90, or £2 if prudent, aside and know you can make the purchase when needed. With a card all sorts of things can go wrong: it may not happen often, but it can be a disaster if it does. I am organised, but even so I once had to live on tap water and a packet of digestive biscuits for three days.

 

[Bletchleyite]

I think that some contributors miss the point. It is not a matter of how easy cash or card make it to keep track of what you have spent. For those on the minimum it is a matter of being able to actually have the money to buy those little luxuries like bread or milk. If you know that you will need to buy a loaf at £1 and milk at 90 p. before you next get paid, you can put £1.90, or £2 if prudent, aside and know you can make the purchase when needed. With a card all sorts of things can go wrong: it may not happen often, but it can be a disaster if it does. I am organised, but even so I once had to live on tap water and a packet of digestive biscuits for three days.

Monzo, for instance, allows you to create "pots" where you can effectively squirrel money away like that and they aren't considered to be in the main account, and it won't pay transactions out of them. They're effectively mini savings accounts (you can also get interest paying ones) but you can create and delete them at will and have a large number of them if you want.

I think it's fair to say that it was much more difficult to manage money in an account in the 1990s and 2000s, when you'd get a paper statement once a month, you'd have to keep track of unpaid cheques and keep a manual tally of the amount you had left. I only found that really workable by way of most spending being on a credit card, so if I mucked up I could just take a small interest or overdraft hit to carry it forward. Obviously poorer people can't have credit cards or overdrafts, so I can see why, in the 1990s world, they'd want to manage using cash.

But the modern app-based banks (Monzo and Starling) have changed the game entirely, making card as easy to manage as cash but adding far more information about what you've spent and where. Other banks are of course catching up. For instance I can look at my Monzo and it'll tell me I have £X left to pay day, having taken all the bills out automatically, and I can trust it. That back in the days when I banked with Smile required an Excel spreadsheet which showed what my balance had to be at a given point of the month to ensure bills were settled.

One thing I find funny about the UK is how people will switch gas and electricity suppliers at the drop of a hat but won't switch banks. The Current Account Switch Service makes it really quite easy.

Monzo isn't perfect, but if people were a bit more willing to switch around then other banks would feel more pressured to catch up.

 

[DelayRepay]

But the modern app-based banks (Monzo and Starling) have changed the game entirely, making card as easy to manage as cash but adding far more information about what you've spent and where. Other banks are of course catching up. For instance I can look at my Monzo and it'll tell me I have £X left to pay day, having taken all the bills out automatically, and I can trust it. That back in the days when I banked with Smile required an Excel spreadsheet which showed what my balance had to be at a given point of the month to ensure bills were settled.

But all of that assumes you have a suitable smartphone and can pay for the connection. For people who are so stretched that they're having to put aside £1.90 to buy a load of bread and bottle of milk, that might not be the case.

 

[Bletchleyite]

But all of that assumes you have a suitable smartphone and can pay for the connection. For people who are so stretched that they're having to put aside £1.90 to buy a load of bread and bottle of milk, that might not be the case.

I think you will find that surprisingly many of those people (I'd venture 95% + of those under 30, say) will have a budget Android smartphone, possibly given to them for free by a friend or family member upgrading theirs. Crikey, even many homeless people have smartphones these days. Monzo will run on more or less anything within reason. You can even use it wifi only, though the anti-fraud software will probably trip a bit more often as it is (quite cleverly) designed to flag up transactions occurring in a location that isn't where the associated phone is. It runs on tablets too if you prefer that.

 

[Deafdoggie]

Just posting that to share my experience that staff, and in some cases it would have been the manager, in shops are extremely happy to handle cash.

Of course they are, no VAT to pay on that. Or it could just be good customer service, if you went in saying you never used cash they'd just be as happy.

 

[Dai Corner]

Of course they are, no VAT to pay on that. Or it could just be good customer service, if you went in saying you never used cash they'd just be as happy.

They probably enjoy getting out of the shop to bank the cash more often too.

 

[Phil56]

People seriously do that?

Older people tend to as they don't "trust" banks. My MIL has cash hidden all over the house but she has dementia now and can't remember where she hides it, so has to keep going to the bank to draw out more (which she hides), and so it goes on..... We found some once in the washing machine detergent drawer!

We used to have a very elderly neighbour who died. Her house was sold and as is often the case, it needed a complete refurb. The new owners found piles of notes wrapped in newspaper in the oddest of places, including a few hundred pounds hidden in a crevice up inside the living room chimney!

And of course, criminals keep lots of cash on and around them to avoid the "audit trail" of using bank accounts, i.e. from tax evasion, money laundering, selling duty free booze and cigarettes, drug dealing, selling counterfeit goods, etc.

 

[Bald Rick]

We found some once in the washing machine detergent drawer!

Perhaps she was laundering it?

(apologies for making light of a possibly difficult situation!)

 

[MikeWM]

The continued ability to pay for things in cash is absolutely central to the ability to transact anonymously, and the ability to transact anonymously - even if you don't *always* wish to do so - is fundamental to a free society.

If the massive government intrusions into our lives over lockdowns didn't convince people of the vital importance of continuing to be able to transact anonymously, then sadly probably nothing will. At least not until you find your bank accounts frozen because you went to an anti-government protest (see the Canadian truckers earlier this year). Or you find you're not allowed to buy the food you want because you've exceeded your monthly carbon ration (already suggested by various people, eg. the head of a major bank in the Netherlands). Or you find you can't buy a train ticket because your social credit score isn't good enough. Or you find you can't buy petrol for your car because you've not had the latest government mandated vaccine/booster. Or...

The possibilities for the micro-management of our lives and our behaviour are almost endless once every transaction you need to make is logged, tracked, and requires some sort of central permission to proceed. I think at some point, and rather soon, most people will lament that they threw away their ability to transact anonymously, simply on the altar of 'convenience'.

As to the specific original question, the answer is yes, as there is far too much vested interest from the powerful in this happening, and I believe they are going to make very sure it does. But while I fully expect that this battle is going to be lost, I'm going to fight it as long as possible. I use cash *more* now than a few years ago, because I see how vital it is, and anywhere that refuses to take my cash doesn't get my custom, full stop.

 

[Xenophon PCDGS]

Monzo isn't perfect...

Not very good to know of that fact if you are going to switch banks. Frying pans and fires immediately are brought to mind.

 

[DelayRepay]

I think you will find that surprisingly many of those people (I'd venture 95% + of those under 30, say) will have a budget Android smartphone, possibly given to them for free by a friend or family member upgrading theirs. Crikey, even many homeless people have smartphones these days. Monzo will run on more or less anything within reason. You can even use it wifi only, though the anti-fraud software will probably trip a bit more often as it is (quite cleverly) designed to flag up transactions occurring in a location that isn't where the associated phone is. It runs on tablets too if you prefer that.

Even if you have a suitable phone, if things are that tight you might not have access to the internet. Either because you cannot pay the bill or cannot afford to top up if on a Pay As You Go tariff.

I appreciate you can use wifi but I don't think I'd want to be in the position of relying on this. There is nowhere in my village that offers free wifi (apart from the pub, but you have to know the password) so it would involve a bus trip to somewhere else to check the account balance.

I am not saying poor people don't use mobile banking - lots do - but if you're going through the worse of times it may be comforting to know your money is in your wallet rather than relying on being able to find free wifi to connect to.

Another use of cash is people who have someone who shops for them. When I was helping a neighbour out with shopping during lockdown (not an elderly neighbour, but they needed help as they'd just had a new baby), they always reimbursed me in cash. Never really thought about asking for a bank transfer to be honest. And if I'm at work and pick something up from the shop for someone at lunchtime, more often than not they'll give me cash, despite the fact we work for a bank and keep telling everyone how wonderful Faster Payments are

 

[ComUtoR]

My Google Wallet shows me the time and location of in-person transactions and even displays a map. I think it uses GPS to determine the location, rather than the address of any central processing facility.

That's interesting. I'll have a look at mine. My bank just pulls the location from the merchant info. Some research led me to one transaction from a vending machine. Still working on tracking the other one.


*Edit* Google wallet only shows my last 7 transactions. It does show the location the card was used which was good (thanks) sadly because it works on the GPS it shows the retailer as "Southern" as I bought a drink before I got on a train. It wasn't even a Southern station *edit*

Cheers for the tip.

I wonder if me and @ComUtoR went to the same pub (the Riverside bar at the Scafell hotel in Borrowdale) in the Lake District that wrongly shows on Monzo as a Harvester, as that's the only place I've had that? I think it is because it once actually was one.

It's because Harvester owns the group. When I saw the transaction flash I googled the owning group and found a whole list of companies. I think this pub was previously a Harvester and it uses all the same epos stuff. But it does highlight that online transactions don't always reflect where something was purchased.

As to the pub... I'd probably buy you a drink

 

[ChrisC]

I will pay in cash occasionally to make sure that I have a reserve of coins for car parks and public toilets. I do try and carry a emergency reserve of about £30 in notes.

I’ve been caught out recently with car parks which are card only and do not accept cash. When going for walks out in the country, either walking from home or parking up somewhere and walking, I rarely take my wallet with bank card with me and prefer to just keep a few pounds in cash in my pocket. A few months ago I drove to a country park and found on arrival that the car park was card only so had to leave and find an alternative place to park and go for a walk. Just last week I went to a similar location where there was a barrier issuing tickets on entrance to the car park. After walking for a couple of hours I returned to the car park to pay the parking charge only to find that the machine was card only. I was very fortunate to have my wallet containing my bank card in my rucksack but it could have been very difficult to pay and exit the car park if I hadn’t. I’m probably just getting an awkward old git but it also annoys me when out on a walk with just loose cash in my pocket to find refreshment kiosks/coffee shops which are card only. I agree that eventually we may become a cashless society but at the moment we are still a long way from it and the choice should still be available.

 

[Dai Corner]

I’ve been caught out recently with car parks which are card only and do not accept cash. When going for walks out in the country, either walking from home or parking up somewhere and walking, I rarely take my wallet with bank card with me and prefer to just keep a few pounds in cash in my pocket. A few months ago I drove to a country park and found on arrival that the car park was card only so had to leave and find an alternative place to park and go for a walk. Just last week I went to a similar location where there was a barrier issuing tickets on entrance to the car park. After walking for a couple of hours I returned to the car park to pay the parking charge only to find that the machine was card only. I was very fortunate to have my wallet containing my bank card in my rucksack but it could have been very difficult to pay and exit the car park if I hadn’t. I’m probably just getting an awkward old git but it also annoys me when out on a walk with just loose cash in my pocket to find refreshment kiosks/coffee shops which are card only. I agree that eventually we may become a cashless society but at the moment we are still a long way from it and the choice should still be available.

I can see why operators of isolated car parks prefer card-only machines which only need to be visited if they go wrong.

Is it such a hardship to carry a card as well as coins?

 

[johncrossley]

With cash you can only spend what is in your hand, not so with credit cards.

There's a big difference between credit cards and debit cards. Debit cards are more fashionable these days. Although credit cards are normally the cheapest way to pay as you normally get the best rewards from them. Cashback from debit cards has improved in recent years, though.

Obviously cash is the most expensive way to pay as there are no rewards for using the ATM or bank counter.

Older people tend to as they don't "trust" banks.

But they obviously trust the Bank of England! If they really don't trust banks then they should be using cryptocurrency!

 

[Dai Corner]

There's a big difference between credit cards and debit cards. Debit cards are more fashionable these days. Although credit cards are normally the cheapest way to pay as you normally get the best rewards from them. Cashback from debit cards has improved in recent years, though.

Obviously cash is the most expensive way to pay as there are no rewards for using the ATM or bank counter.



But they obviously trust the Bank of England! If they really don't trust banks then they should be using cryptocurrency!

Credit cards are only cheap if you don't borrow on them.

 

[johncrossley]

Credit cards are only cheap if you don't borrow on them.

So don't borrow! I've had credit cards for over 25 years and haven't borrowed a penny, except when there was huge money to be made from 0% balance transfer deals in the noughties.

 

[johntea]

My local Chinese are card only but are on the delivery platforms such as Just Eat where you can pay by card and collect, obviously they've slightly increased the prices on those platforms to offset the costs although I notice some takeaways on Just Eat are now offering 'stamp cards' where you essentially get 10% 'cashback' from your first 5 orders that you can then apply to your 6th order

I usually spend on my credit card which builds up points so I can get a Amazon gift card every now and again, nothing amazing but it all adds up - pay it off in full every month of course! I also show no real loyalty to banks when I see the offers popping up to switch for £150 or so, takes 5-10 minutes to do so (perhaps a small credit file impact so perhaps not best to do if you're just about to apply for a mortgage or similar)

 

[Phil56]

I think that some contributors miss the point. It is not a matter of how easy cash or card make it to keep track of what you have spent. For those on the minimum it is a matter of being able to actually have the money to buy those little luxuries like bread or milk. If you know that you will need to buy a loaf at £1 and milk at 90 p. before you next get paid, you can put £1.90, or £2 if prudent, aside and know you can make the purchase when needed. With a card all sorts of things can go wrong: it may not happen often, but it can be a disaster if it does. I am organised, but even so I once had to live on tap water and a packet of digestive biscuits for three days.

But where does the cash come from in the first place? Fewer and fewer people are paid their wages in cash these days. Pensions are mostly paid into bank accounts. So, for most people, to get cash in the first place, they need to withdraw it from their bank account. Ergo it was in the bank and could have been used to buy small things by card had it not been withdrawn!

 

[Bletchleyite]

Perhaps she was laundering it?

(apologies for making light of a possibly difficult situation!)

I've laundered money before. In the washing machine.

Fortunately provided you don't tumble dry them (they shrink), the new plastic notes survive it.

 

[ChrisC]

I can see why operators of isolated car parks prefer card-only machines which only need to be visited if they go wrong.

Is it such a hardship to carry a card as well as coins?

No it isn’t a hardship to carry a card as well as coins, but it is a change of a lifetime habit and takes some getting used to. Even people like me, only in their 60’s, can remember the very first ATMs when you were only allowed to take out £10 and shopping at the supermarket paying by cheque where your bank only allowed cheques up to £50. Your bank card was something you kept very carefully and securely tucked away and you didn’t go flashing it around like people do today.

I’ve never had more than one debit card and have never in my life had a credit card. Therefore the debit card I have has always been connected to my one and only current account which I always keep reasonably topped up to cover the payment of all my household bills etc. Therefore it’s not a card that I would just keep in my pocket on a country walk just in case I wanted a cup of tea or an ice cream.

What I have just done is opened another current account with a different bank. The intention is now to keep no more than a couple of hundred pounds in this account, and often less, then it will be a card that I would feel more comfortable just keeping in my pocket when I go out. I will still use my main card when I take my wallet and go into town on a big shopping trip or away on holiday. I am trying to change with the times and even travel on the train using e tickets these days on my phone and use a mobile ticket on the bus. There do seem to be a number of people in this forum who do not appreciate what a big step it is to go cashless and ticketless after years of only using cash and paper tickets. I’m slowly adapting to it but some never will. I’m quite amused now by the fact that back in the early 1980’s I was responsible for introducing the early BBC computers into the primary school where I taught. I was probably the only person on the staff in those days who knew how to switch them on!