Is Coronavirus a Turning Point for a Cashless Society?

July 3rd 2020 | Posted by Dave Cross

Is coronavirus a turning point for a cashless society?

Is Coronavirus a Turning Point for a Cashless Society?

Finance professionals are waiting with anticipation to see what effect the COVID-19 crisis has on the use of cash in the long-term. Has the global pandemic brought a cashless society closer?

There is no doubt that the use of cash has decreased dramatically at this time. Many consumers are choosing to buy online. Even when they do visit the high street, they are being encouraged to use cards to pay; more specifically contactless on many occasions. This change away from cash has been brought about by the potential danger of transmitting the virus on banknotes.

The perceived COVID-19 risk from banknotes

There is some disagreement as to just how much danger banknotes present when it comes to the transmission of the coronavirus. The official advice from the WHO is that people should wash their hands after using banknotes. The organisation has stopped short of saying that cash should not be used. However, the UK Government has advised businesses to encourage payment by card.

So, we are in a position where people are using cash far less regularly than before. This is in addition to the fact that card payments were already at a high level prior to the pandemic.

A decline in the use of cash

According to figures from the British Retail Consortium, in 2018, 56.8% of all sales were by debit card, 20.4% by credit card and 21.5% by cash, by the value of sales. A total of 9.3 billion transactions were made by debit card as opposed to 7.7 billion made using cash. Most cash transactions were for small amounts.

All of this means that cash was already in decline long before COVID-19 took hold. This brings about several advantages for accounting professionals such as:

  • Enhanced security.
  • Improved hygiene.
  • Reduced manual data entry.
  • More complete digital trails.

There is no doubt that the accounting profession benefits from the reduced use of cash but is a cashless society really any closer?

Is cashless society closer than ever?

According to LINK, there is currently a year-on-year reduction of two-thirds when it comes to ATM transactions. This is hardly surprising given that people are being discouraged from using cash right now.

The big question is how much this will encourage people to change their habits going forward. It’s likely that many people will continue to shop online or pay in-store using a card. This could potentially move us closer to a cashless society than we have ever been.

However, there is an issue that needs to be overcome if this is to happen. Currently, around 1.3 million UK adults do not have a bank account. Creative solutions need to be sought to deal with this situation.

Before the pandemic, many experts predicted that a cashless society would exist within a decade or two. It now seems likely that this time period could be reduced, assuming that something can be done to address issues with the inclusion of all citizens.

If you are an accountancy professional looking for your next role, register with us.