A Step Towards a Cashless Britain?

The Background

The current climate may present itself as a possibility of a ‘cashless’ Britain. Due to the current pandemic of COVID-19, many consumers have adapted to the depths of online shopping, and with many stores adopting a cards-only approach, a dimension of a cashless society has emerged.

The reason behind the current contactless payments system instead of using cash is to limit the rate of infection. In practice, this has been managed by increasing the contactless limit to £45 to allow people to use their contactless payments on more shopping transactions, despite the average weekly shop for a family of 3 being £155.50, but the efforts have nevertheless been made. According to FinExtra, a financial news resource, ATM cash withdrawals have actually ‘plummeted 60%’ since lockdown.


A cashless community can take advantage of a cashless economy whether it directly benefits individuals, or society as a whole. Largely, cashless transactions are quicker and more efficient, which increases the convenience of a transaction.

Firstly, individuals are able to budget efficiently. This may appear obvious, but it is definitely a priority for many people who want to keep an eye on their spending, which is more accessible if the UK became cashless and switches to electronic-only transactions. The reason for this is that you can view all of your accounts, with some banking apps allowing you to set ‘savings goals’ which you can view and update whilst also monitoring your overspending. Indeed, a cashless society may help you keep your money in your pockets – an advantage for everyone!

Secondly, tax evasion will be reduced because a paper trail will be generated for every transaction which occurs. It is estimated that tax evasion in the UK is between £70bn to £90bn per year, only £2bn of which has been recovered from perpetrators using offshore bank accounts. The implication is detrimental to society because it reduces government tax revenue, and if it is very widespread, it could impact the ability of the government to pay expenses, including social welfare, the NHS, and even the military – avoided, if there was a shift towards a cashless Britain.

Thirdly, the British cash infrastructure costs approximately £5bn per annum to run, according to Cash Services and LINK, but could potentially be much higher as it does not include money saved overseas. This is largely a fixed cost paid for principally by retail banks. From this fixed cost, approximately £2bn is used for cash processing and distribution, whereby another £1bn is attributable to running and maintaining ATMs around the country. In this respect, a cashless economy would be beneficial as it would limit the profligacy of money production in the UK.


Elderly people and low-income groups may be financially excluded from the cashless society as they may be not able to bank online. In addition to this, smaller businesses risk losing customers as they may not have bank accounts set up for the benefit of their business, or will only accept cash: this will, of course, have an economic impact. SMEs should definitely consider this drawback and start being innovative in their approach to retain customers.

In addition, cyberattacks and fraud will inevitably increase as electronic payment systems are much easier to counterfeit than cash. Businesses will need to be innovative to reduce their chances of a cyberattack which consequently can incur fines. It was published by The Actuary Magazine that cybercrime indeed costs the "global economy $5.2trn [£4.19trn] over five years.” Therefore, companies must be innovative to enhance their fraud detection – a term used to identify if fraud has taken place. Fraud claims affect industries such as finance, insurance, and government, all of which use electronic payment systems in their process. To counter this, companies will need effective detection techniques and processes in place for when their preventative techniques fail.

Finally, it is important to note that charities may face a crisis. A massive approximation of 70% of donations to charity is made in cash due to the convenience of it. Only 8.4% of overall fundraising income was raised in 2018, albeit a ground-breaking record compared to other years. It is, therefore, possible to identify that should the UK switch to a cashless economy, a charity crisis may await in the near future. With the collapse of charities relating to the prevention or relief of poverty, it may have a negative implication on the global economy with increased strain on the state welfare system.

What is Next?

The decrease in the use of cash projected to happen within the next 5 years has actually happened in the last 5 months due to the consequences and results of COVID-19. It may prove that ‘cashlessness’ is, in fact, possible and not too far away. Sweden, where 80% of transactions are paid by card, is the first society expected to be cashless by 2023 – even children can pay with debit cards! But have Sweden taken it too far by the microchip implant revolution, inserting microchips in the hands of thousands of Swedes?

And for Britain?

Previously estimated a decade, Britain could be cashless within the next 2-3 years, meaning that changes to the law, particularly relating to the economy, maybe underway to ensure a safe and efficient switch over. COVID-19 has undoubtedly sped up the process of moving away from cash with around 50% of small businesses becoming cashless already: the transition may be easier than we think.

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