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Cash payments ROSE in September for the first time in a decade.

By Chloe May and Research & Campaigns Team

Currency jar
Has digital killed the currency jar? Not yet.

Cash payments were higher in September for the first time in a decade. Since 2012 as debit card use increased relentlessly the number of cash transactions has been in steep decline.

Until now.

Online shopping, banking apps and credit transfers have been replacing notes and coins for years. In 2017 card payments overtook cash as the primary form of payment.

But recent data from UK Finance*, a trade association, shows cash transactions growing for the first time in 10 years. It’s probably down to the cost-of-living crisis. Cash makes it easier for people to keep track of spending which is essential when living on a tight budget.

Able to budget

Last month BBC radio interviews** confirmed this explanation. Asked why she continued to use cash one interviewee said: “I know how much I’m going to draw out. I know how much I’ve got, and I know how much I can spend on food so then I’m able to budget it accordingly.” 

One thing contributing to the rise in debit card spending could be more businesses refusing cash payments. Some adopted the policy in the pandemic for understandable health reasons; for others it’s efficiency and customer convenience (also understandable).

Yet for many, including some of society’s most vulnerable, going cashless creates real problems. 

Age UK has argued that a cashless society won’t work for everyone. Older people are more likely to rely on cash as a habit of a lifetime. Many aren’t comfortable with newer forms of payment, let alone ‘going digital’.

Other vulnerable groups also rely on being able to make cash payments.

Many people, many reasons

Homeless people and refugees find it harder to set up the required accounts. For victims of domestic abuse not leaving a digital trail can be crucially important. And lots of people, often on a lower income, just prefer cash because it allows them to budget more effectively. 

Following cash-use trends, UK Finance say cash tends to be used more during times of economic crisis. It happened for example in the 2008 financial crash. By 2032 though they predict use of cash will halve. But they think the rate of decline will slow as “use becomes concentrated amongst people who have a strong preference for cash”.

This makes sense to us at Citizens Advice Epsom and Ewell. We support innovation and business efforts to increase efficiency and productivity. But we also advocate strongly for companies and all service providers to recognise and prevent digital exclusion.

They should retain cash as an option and help maintain quality of life for millions of vulnerable people.

* UK Finance, Monthly Economic Insight, October 2023…
The data that attracted the most attention was the increase in the number of cash transactions (though still on a declining trend in terms of the share of all payment methods). The increase in cash transactions is a rarity, but generally coincides with periods of economic downturns as some people are make greater use of cash as a way of managing budgets – a factor again at play during last year’s cost of living pressures. / Over the next decade, we expect to see a continuation of current trends, with debit cards becoming ever more popular and cash usage continuing to decline in importance and lose its top three podium spot in 2026.
** You and Yours, BBC Radio 4, 09/10/23

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