WES 2025: The necessity of cash in a cashless world

Cash is king. 

This term is famous among anyone who has ever been involved in business.

Yet, transactional use of cash has declined from approximately “50% of transactions a decade ago to around 10-12% today”. On the surface, this fall is spectacular. For all of human history, we have used a physical form of currency, be it seashells and beads or in more recent times, metal coins, paper currency and now, money you can spend with the tap of a card.

It may seem that, at this rate, cash will soon be irrelevant in the economy.

“As long as the public still want bank notes, we’ll continue to provide them”

Nick McLaren, Head of the Future of Money Division, Bank of England

Nonetheless, the Bank of England (BoE) “remains committed to cash” according to Nick McLaren, Head of the Future of Money Division at the BoE. “As long as the public still want bank notes, we’ll continue to provide them,” he noted. McLaren claimed that we shouldn’t call our society “cashless” and rather, we should refer to it as a “less cash” society.

Why? Well, many consumers still use cash. It remains the “second-most frequently used payment method behind debit cards”. A key reason for this is, according to the Financial Conduct Authority (FCA), that over one million adults in the UK do not have a bank account. They are completely removed from digital banking. Furthermore, the FCA estimates an additional two million people use cash for the majority of their transactions. 

Simply put, we cannot abandon cash. Leaving one million citizens without a means to purchase essentials would be unacceptable. This is especially true given cash reliance is prevalent among the most vulnerable groups, like “lower-income households, the elderly, and those with disabilities”. Also, the homeless often find themselves relying on cash too. 

Have you ever seen a homeless person with a card machine? I don’t think so. Their income for survival often comes from begging on the streets – people can only donate cash. However, this may eventually change with a government initiative focusing on giving homeless people bank accounts and card readers.

Moreover, cash can be a highly convenient means of exchange as, often, it can be a significant challenge to send money to friends online. You have to ask for their account number, sort code, and full name before passing security checks on your banking app. Then, you have to type all of this information. By the time you are finished, you’ve spent over a minute transferring funds, even though you could have done so with cash in mere seconds.

The security of cash is a massive plus

Plus, cash will always work. At times, my banking app has been shut down; be it for maintenance or a fault, it’s inconvenient. This has occurred multiple times, and without access to a banking app, you may not be able to transfer people money as quickly as you otherwise would. The security of cash is a massive plus.

On the other hand, I’ve felt the inconvenience of cash too. I work at a Sainsbury’s convenience store during the holidays. As a cashier, I can tell you it is without a doubt easier when customers tap their card, compared to paying with cash. This is especially the case with change, which is often seen as something to get rid of. Sometimes, you can even get people paying with only small change, adding further difficulty and prolonging the transaction.

Yet, I feel like this is a small price to pay, especially as I don’t mind counting cash. It might be a less efficient payment form for firms, but ultimately, it is necessary if businesses want to access the entire customer base.

A new BoE development is the concept of the ‘digital pound’. Cash plays an “important role” in the uniformity of money. You know that you can always exchange £10 in your bank account for bank notes. Yet, with cash use becoming less and less prevalent, they are asking the question if there’s a need for a “digital equivalent”.

About 95% of the population believes we are not ready to go cashless – likely because 85% of people in the UK still use cash

McLaren believes it could be a “reference asset” in the new digital economy and “act as a bridge” to “deliver interoperability between new exciting forms of money and existing forms of money”. Yet, it is likely to be an alternative to cash rather than a replacement. It will have the same value as banknotes and the same characteristics, but just in digital form.

So far, there has been no decision on it. However, the BoE is undertaking a three-year design phase, ending in 2026, to decide whether they should develop a digital pound. If the BoE believes it would be beneficial, both houses of parliament will then need to assent to it.

According to John Howells, the Chief Executive of ATM network LINK, about 95% of the population believes we are not ready to go cashless – likely because 85% of people in the UK still use cash. Expanding on my earlier point about the resilience of cash, he referenced when both Mastercard and Visa “went down in the UK and other major markets” in July of 2024. Consumers were unable to shop at Tesco, Sainsbury’s, Asda and M&S – without digital payments, people were unable to live their lives.

He argued that “we’re not ready to go cashless yet” until “we can get the resilience up to 100%”. By this, he means full public support and being able to make digital payments accessible to all.

Cash will continue to be an important aspect of our economy for the foreseeable future

Furthermore, he believes we have got “at least 5 to 10 years’ worth of protection in the UK” due to BoE regulation. Also, LINK will continue to make sure every street has an ATM and every town has a bank of some sort for the time being. Although, he claims that eventually, “shops will stop accepting cash”. We have already seen this after Covid-19 with some firms, like Domino’s, reducing their acceptance of cash.

Ultimately, cash will continue to be an important aspect of our economy for the foreseeable future. I view it as unlikely that we will eliminate the need for cash in the next few decades. This is especially true as it has become a highly politicised issue, with many, including myself, believing a world without cash seems almost dystopian.