With the percentage of payments in the UK being made with cash dropping from 56% to 17% over the last decade and the increasingly widespread adoption of contactless payments, it appears we are gradually moving towards a cashless society. While living cashless is becoming increasingly accessible, it is not universal and has the potential to increase the digital divide between the poor or elderly who have less access to online banking.
The environmental benefits of a cashless society would be seemingly obvious as it would reduce the need for the mining and melting of materials for coins as well as the use of plastic and papers for the production of notes, however these benefits are somewhat tenuous. The move towards a cashless society would be benefited by an increasing adoption of cryptocurrencies such as bitcoin, which are digital and do not require physical coinage. The usage of cryptocurrency is even something the government is looking to adopt, with Chancellor Rishi Sunak suggesting the creation of a ‘Britcoin’. However despite their digital nature, cryptocurrencies themselves have a notable environmental impact. According to the Financial Times, the production of Bitcoin, which is only one of many cryptocurrencies, alone consumes half as much electricity as the United Kingdom. With 65 percent of crypto coming from a coal reliant China, any environmental benefit of cryptocurrency is negligible without the adoption of renewable energy sources.
The acknowledgement that we are not yet at the stage to become cashless while still needing to combat the climate footprint of physical currency, has led to the Bank of England and representatives of coin and banknote producers signing the UK Cash Industry Environment Charter in the lead up to COP 26. More than 200 crypto and financial companies have also signed up to a Crypto Climate Accord, acknowledging the need to rapidly decarbonise the cryptocurrency industry before it can be widely adopted. Despite his proposal of ‘Britcoin’ Sunak has also acknowledged the need to allow continued access to cash, as well as the need for a Central Bank Digital Currency (CBDC) to be sustainable.
With only one percent of Sweden’s Gross Domestic Product being circulated in cash in 2018, a cashless society is certainly an achievable prospect. However the Swedish parliament has found this change to be too rapid, restricting access to the protections of state-issued physical cash to many. These lack of protections mean that in the case of intermediary banks going bankrupt, as seen in the UK with the closure of Northern Rock during the global financial crisis, customers may lose access to their own money. This has led to Sweden’s own proposals of a CBDC to complement by not replace cash by Riksbank, the central bank of Sweden.
Before fully implementing a cashless society, the effects of such a society on charities, particularly homeless charities, needs to be addressed. With no spare change to give, the chances of homeless people receiving donations has been reduced. Charities such the Rough Sleeping Partnership in Bristol have attempted to implement contactless donation points within the city and the Greater Change programme in Oxford has introduced an app to allow for secure cashless donations. While this could be beneficial as donations go direct to homeless charities, ensuring any money is being spent safely and addressing homelessness issues as a whole, research by the Auckland University of Technology has found that consumers are more apprehensive about cashless donations, though those who do donate using cashless means tend to donate in larger amounts.With rough sleeping increasing by 52% in the last decade, a system needs to be put in place to combat the effects of reduced charitable donations in light of the move towards a cashless society.
The key issue that currently prevents a cashless society is that cash is still currently needed or else a significant division will be created between those with access to online banking and those who do not. This division exists both due to a lack of physical access by the poorer in society and also a lack of the basic technological competence by the elderly. This division has been described as the digital divide and disproportionately affects the disabled, those on low incomes and those over 65. According to the Office of National Statistics, 3 million people in the UK are completely offline, 67% of which are aged 70 or over. While this is a minority in the grand scheme of things, 3 million is a significant minority that cannot simply be left behind.
The economic disparities spurred on by the Covid-19 pandemic have also further exacerbated the digital divide between lower and higher income families. 51% of households with an income between £6000-£10,000 have access to the internet compared to 99% of households with an income over £40,000. With many jobs requiring access to the internet, particularly with an increase in the number of people from home, this lack of internet access is incredibly restricting and significantly limits the upward mobility of those within lower income households.
The move towards a cashless society is a promising one that isn’t unlikely, as the UK trends towards reducing the amount of cash it uses. Before this transition can be completed however, lessons must be learnt from Sweden’s implementation and wider societal divisions, including the digital divide must be addressed.
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