The rise of internet shopping, online banking and contactless payments, all more widely adopted during the pandemic, means we are arguably living through the biggest shift in how we deal with money since the UK said goodbye to the shilling in February 1971. And with a whopping 85% of payments made without notes and coins in 2021 – according to the latest Payment Markets Summary from banking trade body UK Finance – it is safe to say that cash is no longer king.
Yet, despite the undoubted benefits of payment innovations, millions of people are being left behind. According to the Financial Lives 2020 survey by the Financial Conduct Authority (FCA), 4.7 million adults in the UK are ‘digitally excluded’ and unable to use the tech required to go cashless, while 1.2 million lack the most basic requirement for a cashless society: a bank account.
With the march towards a cashless society gathering pace – UK Finance estimates that only 6% of payments are forecast to be with physical money by 2031 – attention needs to be given to those who will struggle, and are already struggling, before it is too late.
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“The dwindling use of cash, in favour of card and contactless payments, has had a huge impact on those who find themselves homeless or vulnerably housed,” says Dean Fencott, training programme manager at the Big Issue Group.
There were 2,440 people sleeping rough in England on a single night in autumn 2021, according to the government’s Department for Levelling Up, Housing & Communities. Separate from these official figures, research by the Combined Homelessness and Information Network reported that 8,329 people were sleeping rough in London alone between April 2021 and March 2022.
Having less cash in circulation exacerbates the problem. That is why The Big Issue has taken steps to combat cashlessness. The charity announced in May 2022 that 1,000 of its 1,500 vendors can now take contactless payments, with the aim of making all sellers cashless by the end of the year.
Access to these cashless payments means that vendors are “improving their financial resilience and building their digital skills at the same time,” Fencott continues.
But the average person sleeping rough won’t necessarily have access to card or digital payments, relying on cash to cover the cost of food, water or shelter. So the need to protect access to cash and keep it in circulation will remain until those who are homeless, unbanked or digitally excluded can get the support they require.
Older people and digital exclusion
As Fencott highlights, digital skills are a must in a cashless society. And for older people in particular, gaining those skills isn’t always easy.
The FCA survey showed the idea of digital exclusion is “strongly correlated with age”. More than a quarter (28%) of those aged between 75 and 84 were digitally excluded, rising to 74% of those over 85.
The same survey also found that almost a fifth (19%) of 65- to 74-year-olds, and 24% of those aged over 75, greatly relied on cash over other payments in their day-to-day life, leaving these groups at even greater risk of isolation and financial difficulty in our increasingly cashless world.
“[While] many older people want to increase their skills in this area, the most important thing for those in later life is choice when it comes to payment options, especially as the cost of living crisis intensifies,” says Simon Hewett-Avison, director of services at charity Independent Age.
‘Unbanked’ and unable to pay
Acquiring digital skills isn’t even the first step to participating in a cashless society – it’s having a bank account. And while many of us may take that for granted, it is something 1.2 million people in the UK do not have.
When you dig into who doesn’t have a bank account, you start to get a stronger idea of how a cashless society, unattended, will further entrench inequality. Unemployed people, those who work in the gig economy, people in financial difficulty, and households with an income of less than £15,000 a year are the most likely to be ‘unbanked’, according to the FCA. Once again, it is the nation’s vulnerable that finds themselves on the margins of our cash-limited present, and cashless future.
One group the FCA doesn’t mention is the unhoused. Yet, as Matt Downie, chief executive of charity Crisis, explains, “requests from banks for proof of identification or a fixed address can make it extremely challenging” to open an account when experiencing homelessness.
Without the right measures in place, the shift away from cash will only further punish those who may already be struggling financially.
“Where possible, shops should consider still offering the choice between cash and digital payments so that nobody, especially people in vulnerable situations, will be left financially excluded,” adds Downie.
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