Knight’s Days – Reporting back from Westminster with Sir Greg Knight MP: The move to a cashless society
Whilst the pandemic has put many people’s plans on hold and has slowed down the progress on many activities and issues, there is one area where a step change seems relentless and appears to have moved a stage nearer.
Many analysts think that we are steadily moving towards a cashless society in the UK with the use of coins and banknotes now being put under severe pressure.
This has been one of the consequences of the pandemic, as many businesses have insisted upon alternative methods of payment other than cash.
Early in the pandemic, the contactless card limit – that is the value of a transaction that can be completed by holding your card near to a card reader rather than entering a ‘pin’ number, was raised from £30 to £45, which is the maximum amount allowed under European Union law.
However, now that the UK has left the EU and we are no longer bound by EU rules – on contactless payments as well as other things – the limit has been more than doubled to £100, although some businesses are yet to implement the uplift.
Getting rid of cash makes sense for banks and businesses because cash is expensive to store, not easy to move around and, during a pandemic contains a risk of carrying infectious germs.
By contrast, an electronic transaction generated by the waving of a card is much cheaper.
But some of the side effects of a move away from cash are perhaps not immediately obvious.
Moving from cash to electronic payments means that the banks handle less cash and, as a consequence, they do not need as many physical outlets for their customers to visit – hence the ongoing closure of banks branches that continues month by month.
It already looks fairly certain that there will be more bank branch closures occur in during 2021 than occurred in 2020.
However, even before the pandemic, many young people were more inclined to use contactless payment methods than those who are older and, across all age groups, the move away from cash has been accelerated by the raft of bank closures.
In the future it is likely to become even harder to obtain access to cash, as we also are seeing a reduction in the number of cash machines, whether by bank edict or abetted by acts of criminal damage.
The latest figures suggest that over 7 million people in the UK now only use cash once a month and that only a quarter of all monetary transactions still take place in cash.
Businesses and trade unions do not usually see eye to eye, but on this issue the Federation of Small Businesses and the GMB union are both firmly on the same side and are now petitioning the government to protect the future use of cash.
They do have a point. Not everyone wants to go cashless and why should they?
The Government is already monitoring the impact of Covid-19 on the UK’s cash infrastructure and says it remains committed to protecting access to cash for those who need it.
This is welcome. The move towards a cashless society clearly suits some, including the banks, but we must not let the banks call all the shots.
Parliament needs to ensure that those who prefer to use cash will, in future, continue to have the opportunity to do so.