Payments Choice Alliance Challenges UK Cashless Transition
Given post-pandemic cash usage, the UK is preparing to follow Norway and Sweden in becoming cashless. Online payments have grown in London, where many retailers no longer accept cash. As e-wallets and digital transactions increased, the desire to isolate during the epidemic expedited the transition.
According to the World Economic Forum, currency use fell from 10.4% of the US GDP to 8.6% between 2021 and 2022, and from 10.1% to 9.8% in the Eurozone. 90% of central banks are planning central bank digital currency (CBDC) to eliminate cash use.
The Payments Choice Alliance, which wants payment alternatives for every Briton, opposes this change.
Ron Delnevo, Payments Choice Alliance chair, told:
“The ability to use cash in the UK is under threat. We are facing a situation where a lot of people are not being able to exercise choice, that they would have had until very recently, in making payments. The Alliance is not an industry body; it is made up of people from various sectors of life who believe in payment choice, and associated rights and values such as democracy, free speech, independence, and privacy. We believe payment choice is a pillar of democratic society – and it is a pillar we are aiming to keep in place.”
Delnevo says 40 million UK citizens are at risk of isolation without cash payment choices. These include low-income folks, senior persons, tourists without international cards, and small enterprises that budget with cash.
Can retailers provide assistance in the absence of banks?
Sainsburys and Tesco, who accept cash and have ATMs outside their stores, have prioritised offering customers several payment choices. Delnevo said the Payments Choice Alliance wants these merchants to allow businesses to deposit cash in-store.
“Businesses which accept cash for payments – and they all should – need to be able to deposit that cash conveniently. To help with this, it would be great if Tesco, Sainsburys and other major retailers could provide a home for cash deposit solutions, so that any business in a local community can come along and deposit their cash takings in a secure environment in a machine that’s set up to accept cash deposits. Clearly, there are very few bank branches left to offer a cash deposit option and whilst it is excellent that businesses can deposit cash in post offices, that’s not always convenient or available seven days a week.”
What legislation must be enacted to establish currency alternatives?
Delnevo points to new legislation in Spain, elements of which could be included in a UK Payments Choice Act:
“In Spain, in May 2022 a law came into force which includes payment choice provisions. This law compels businesses to accept cash payments up to €1000 per transaction. The law also covers other payment methods, but at its heart it is focused on ensuring the Spanish public can spend their cash when and where they want to do so. At the Payment Choice Alliance, we believe that the British public deserve the same rights to use their cash as the Spanish public now enjoy.”
Delnevo says the Alliance is speaking to MPs to raise awareness of the UK’s cash payment shortage. If a UK Payments Choice Act is not passed in 2023, cash payments could become a General Election topic in 2024. MPs from multiple parties support the cause.
UK cashless society progress?
Dynatrace regional director of financial services UK&I Martin Bradbury disagrees. Bradbury says:
“A cashless society enabled by digital innovation has the potential to unlock a range of economic and social benefits. For example, with taxation, there would be a higher level of transparency because of the precise transaction records and identifiable digital footprints that cashless transactions automatically provide.”
Multi-factor authentication and encrypted digital wallets can protect users from fraud and theft in a cashless society, he says.
Bradbury adds that personalization, education, and inclusion must be phased in to include lower-income communities and older generations in a cashless system:
“Interfaces and apps should be tailored so that all levels of digital skills and economic circumstances are fully catered for. For example, there is often an assumption amongst those who are digitally native that everyone has access to the necessary technology but this might not be the case. A good payment experience also differs across socio-economic groups, and so banks need to tailor each experience and educate users on how to best use the services for their specific situation.”
He suggests that governments and banks employ data and AI technology to evaluate payment behaviour and improve customer experiences for all social groups. The UK is far from cashless. The payments ecosystem and banks must provide everyone with online payment options and run smoothly to minimise digital service disruptions.
Cash or e-card for UK payments
Bradbury and Delnevo’s views on cash in the UK’s future are opposed but equally strong. As the nation moves towards more online payment methods, banks, fintech, and the government must work together to meet public needs, whether that means preserving cash payment options or investing in digital payment technology.
