Cash payments increased in the UK for the first time in a decade last year, driven by a post-pandemic rebound, economic uncertainty and the cost of living crisis. Data released on Thursday by trade body UK Finance showed growing demand for plastic and particularly contactless payment methods, but also pointed to the continued importance of physical money. “It’s something we do tend to see in times of falling consumer confidence and economic uncertainty,” said Adrian Buckle, UK Finance head of research. “We saw this in 2008.” The volume of cash payments rose by 7 per cent year on year in 2022 to 6.4bn. Among 16- to 24-year-olds, traditionally viewed as digitally savvy, more than 15 per cent of payments last year were made with cash.
Although the use of cash has been in decline over the long term, campaigners have argued that it plays a key role in budgeting, especially for those who are less comfortable with digital approaches, and is vital for groups including the elderly and those in rural areas. “In places where they are cashless, if there’s no online connection [retailers] can’t take any cards or [contactless payments],” said Derek French, a former NatWest executive and long-term campaigner for access to cash. “If they were still taking cash . . . they could still be open and trading.” Branch numbers are also falling, with more than 600 banks due to close by the end of 2023, leaving about 4,000 across the UK, according to data from ATM provider Link and Which?, a consumer group. In August, the government released its proposals to ensure that provisions to access cash are protected, with the Financial Conduct Authority overseeing banks’ role. “It is right that millions of consumers across the country find paying digitally easy and convenient, yet, as UK Finance’s report shows, there remains a significant minority of people who are not yet ready or able to make that switch, evidenced by an increase in cash payments over the last year,” said Sam Richardson, deputy editor of Which? Money.