Wither Cash In The UK?

Though the death of cash has been greatly exaggerated, to cop a phrase from Mark Twain, at least in the United Kingdom that hoary old medium of exchange is starting to wheeze a bit.

As reported by The Financial Times on Friday (Dec. 11), a new report from the U.K. Cards Association (UKCA) states that the rise of cards as a transaction vehicle is making a dent on cash payments at pubs and other outlets that had traditionally been averse to taking plastic for payments.

The report notes that spending via cards has more than doubled over the past 10 years, with the most recent tally at £566 billion in 2014 from £270 billion in 2005.

It stands to reason that as card payments rise, cash use would decline, and the UKCA data verifies that juxtaposition, with non-cash payment methods outstripping those of cash payments for the first time, at least in the U.K. That comes as digital payments gain increasing acceptance at retail locations, and the figures show that cash transactions across individual consumers and also businesses fell to 48 percent last year, which was down from just over half in 2013.

One illustrative point: spending in pubs across the region stood at £5 billion last year, compared with £1 billion in 2005, quite a jump. Further speaking to the trend: spending in supermarkets via cards came in at nearly £99.5 billion vs. £51.2 billion over the same timeframe.

On the flip side, the movement to online purchasing has meant that spending at brick-and-mortar locations – particularly in record shops and also video outlets (do either of those still really exist?) — was off by double digits (and alarmingly so) over the past decade, by a respective 71 percent and 49 percent.

The trend seems to be an inexorable one. As Richard Koch, who heads policy at the UKCA, said, “Today we think nothing of paying for a coffee and a sandwich with a contactless payment card, or streaming films on a smartphone which is also enabled for mobile payments.

“This is so different to a decade ago when we carried more cash and shopped in high street stores.”

Underscoring that trend, spending via mobile payments in the U.K. could rise nearly fivefold over the next decade to £54 billion annually. And card usage is here to stay as card spending proves resilient, having grown even during the great financial crisis through 2008 and 2009.