Contactless payment transactions tripled in 2016 – but predictions of the demise of cash may be premature, according to the Bank of England’s chief cashier.
Speaking at the Future of Cash Conference in Vienna, Victoria Cleland said cash was still the preferred payment for many, with 79% in the UK saying they would never go completely cashless
She said in 2016 the value of Bank of England notes in circulation increased by 10%, reaching over £70 billion in the run-up to Christmas - the fastest growth in a decade – with cash remaining the most widely used payment method in the UK.
Some 2.7 million people in the UK rely almost entirely on cash transactions, an increase of 500,000 since 2015.
Cleland said: “For consumers, a key benefit of cash is its tangibility. It can be a useful budgeting tool, and it is a quick and easy payment method which works even when, for example, card terminals do not. For retailers, cash is still the cheapest method to accept.”
According to the British Retail Consortium, in 2016 the average cash transaction cost a retailer 0.15% measured as a percentage of turnover, compared to 0.31% across all payment types.
Clelend told the conference the fall in the number of ATMs per person reduces demand for cash, though this could mean the banking sector needs less cash to stock them, or that consumers withdraw less cash because there are fewer ATMs nearby.
She also said new personal finance technology can increase cash demand, such as M-Pesa, the money development platform in Africa, where users deposit cash into an account stored on their mobile phone.
Cash can also have a role in internet shopping, with the recently launched Amazon Top Up allowing users to deposit cash into their Amazon account at participating retailers.
Mean guile apps such as Shpock and Gumtree allow buyers and sellers to agree on a price and then meet to make the transaction, enabling the buyer to check the condition of the item and for cash to be used.
