It would seem pretty strange for Robert De Niro to get out a money clip in Goodfellas and hand over a credit card, but new statistics from the Payments Council show that cash payments are becoming less and less desirable, in comparison with the upward trend of digital transactions.
But as we consider the idea of virtual money whizzing around cyberspace like a race-car around a track, it's worth considering that there have been wild predictions and speculation regarding other items becoming obsolete which have simply never stuck. The paperless office caused a buzz a decade ago with its promises of superior processing and environmental advantages, but never materialised. Compact discs' days were numbered after streaming and downloading became common place, but have survived (so far) because some people don't yet fully trust digital technology or prefer items they can see, touch and feel.
If paper can be considered on the brink of annihilation, then how seriously under threat are metal objects that have been around for less than three-thousand years?
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Cash by the numbers
You don't need to be a financial wizard to spot numerical trends, and the number of cash transactions in the last ten years tell their own story. According to the Payments Council statistics, in 1999 three-quarters of all transactions were carried out using cash (73 percent), compared to 59 percent in 2009. The council suggest that by 2018 less than half of all transactions will be paid by cash.
Even in a traditionally cash orientated Great British institution like the pub, the numbers are dwindling and landlords and franchises are being forced to replace the cash till for the Chip n' Pin machine. In 1999, 90 percent of purchases were paid with cash, now only 40 percent. By 2018 the figure is likely to get smaller at 25 percent. (Although I'm taking a wild guess and saying the queues will get bigger.)
The numbers are telling with regard to total value of spending too, with GBP£65 billion spent using the plastic ten years ago in comparison to GBP£264 billion today. That's a staggering 400 percent increase.
Why the digital expansion?
There are a number of reasons for this change. Whereas 12.5 percent of people in 1999 were paid with cash, only five percent are paid with cash now, with the council predicting that only two percent will be paid in that manner in 2018.
People today are also in the habit of using their credit card to pay for their purchases. The ease of buying petrol or going online and buying that snazzy flat-screen means that many people opt to use credit cards as they feel they are easier and more convenient. Not only does it save us the time and effort of visiting the bank or cashpoint to withdraw money, but we also feel much safer carrying smaller amounts of money in our wallets. Using credit cards also brings with it the added benefit of accumulating points which lead to free flights, accommodation and other goods.
Why could cash hang in there?
However, before we start to write an obituary for cash, let us consider some of the positives that bank notes and coins bring. Firstly, as consumers using cash, we don't fall foul to high interest and credit related debt, as using cash means we can only spend what we have.
In some environments it's possible to barter a price down, something that waving a card around just won't do.
Physiological studies have also shown that money in our hands means we are less likely to spend it. After all, we can quantify how much something costs when we hand over a big wedge of notes, an experience that is significantly reduced when we click "pay now" on a computer.
Purchasing with cash also means we don't create a paper trail for ourselves and limit the amount of junk mail that lands in our inbox.
Regardless of these positives, the reality is that the digital age has consumed us and there is simply a dwindling need for cash payments. (I never thought I would be paying to use a payphone with a debit card, but alas...) Sure, cash will always have some element of usage in society, but the bottom line is this: Do we want to be buying a chocolate bar to break a twenty for the Tube when we can use an Oyster card and pay instantaneously and not double our weight in coppers? Time is money and now the digital age is truly here, it's about time we embraced what it has to offer.
Don't lose your card mind you, as it'll be a financial and logistical nightmare.
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