The UK has recently started introducing its new five pound note to cash machines across the country. Printed on polymer the new note boasts more durability and better environmental care, it also marks the biggest change to our currency for over 40 years. However, as the number of payment through contactless bank cards and mobile phones increases, we appear to be heading towards a society where cash becomes obsolete.
This may not seem like an immediate possibility to many of us in the UK. After all, the Bank of England is still planning on releasing a revamped £10 in 2017, followed by a new £20 note by 2020. However, the cashless revolution is already underway in Sweden, as the country slowly starts to move away from physical payments, opting instead for digital transactions.
Currently, Sweden’s central bank Riksbank claims that cash transactions make up for a mere 2% of the value of all payments made throughout the country and it’s estimated that by 2020 this figure could drop even further to 0.5%. The bank also claims that out of all the purchases made in shops, barely 20% of the transactions are paid for with cash.
The move towards a cashless country is mirrored through the Swedish people’s attitude towards physical money. It is now impossible to buy a ticket on the Stockholm Metro with cash and retailers are legally allowed to refuse coins and notes if they choose to. Alongside this, around 900 of Sweden’s 1600 bank branches no longer keep cash and won’t accept cash deposits.
While Sweden is leading the way and innovating alternative payment options, the rest of the world isn’t too far behind. The ‘tap-and-go’ form of payment has been widely accepted throughout London, with Transport for London banning cash payments on buses in 2014 only one example of physical money being phased out. The technology that makes cashless payment acceptable has now become mainstream, with the Guardian reporting that there are more than 92 million contactless cards currently in the wallets and purses of British people.
Alongside this, Google have recently released their own form of mobile payment for Android phones, rivalling the iPhone’s Apple Pay which has already been available for two years. This means that two of the most widely used mobile operating systems now allow users to use their phones for contactless payment and waive the £30 limit that contactless cards adhere to in the UK.
While major European countries are helping to advance this cashless trend, there are still those who are sceptical. Concerns are that each and every transaction could be tracked through cashless payment, much like credit card transactions currently are.
Rainey Reitman, Activism Director at Electronic Frontier Foundation, discussed the dangers of having all of our purchases tracked:
“When all our payment transactions are tracked, it creates a trove of data we have no control over. It's easy to imagine a daring divorce lawyer or a government agent trying to gain access to our financial history to try to build a story about who we are."
Alongside these privacy concerns are the further implications that a cashless society could have on those who decide to remain outside of the banking system. In the US the FDIC reported that in 2013 around 8% of the population was unbanked and the introduction of a cashless society would particularly impact this percentage of the community.
It’s been more than 40 years since decimalisation, the last revolution to how we pay for things in the UK. While the introduction of new notes may prove that our government is not yet ready to champion a cashless society, countries like Sweden are proving that there are certainly benefits and public support for seamless, digital transactions.