- Bank of England/Flickr
LONDON – “Cash is not in decline,” according to the Bank of England’s Chief Cashier Victoria Cleland.
Speaking at the Future of Cash Conference in Vienna, Austria, on Thursday Cleland said that while the number of non-cash transactions in the UK is increasing, the amount of physical money in circulation is actually rising too.
“Very notable in the UK is the rise in the use of contactless cards, which tripled in 2016 accounting for 7% of payments,” Cleland said. “The shift in consumer preferences is also evident in online spending, where average weekly online shopping in the UK was £1.1 billion in August 2017.
“But the numbers show a different story. 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.”
Some commentators have believe cash faces an interminable decline due to the rise of payment methods like contactless cards and Apple Pay. Last year, for example, MasterCard’s UK and Ireland boss Mark Barnett told Business Insider that handling physical money will seem as old-fashioned as the horse and cart in 30 years. Cash rates in countries like Sweden are also in decline.
But Cleland argued in her speech: “Cash continues to play a key role for many, and a crucial role for some.”
“2.7 million people in the UK rely almost entirely on cash transactions – a number that has increased by 0.5 million since 2015,” she said.
One of the main drivers of cash’s continued popularity is its so-called “tangibility” – the fact that it is physically there, and will never fail to work. If you’ve got some cash in your pocket, you know you can pay for things.
“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,” Cleland said.
Cleland’s view backs up that of Ian Bright, a senior economist with Dutch bank ING, who found that almost 80% of Brits don’t see society ever being cashless and argued in an extensive report earlier this year argues that society will never end up being truly cashless.
“There are aspects of things that people prefer about cash,” Bright told Business Insider in an interview in April. “It was fairly clear in our survey that people note cash carries more degree of privacy over non-cash items. And that was one of the key reasons people said they will continue to use cash in their transactions.”