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What will a cashless society mean for us?

By Mark Andrews | Bridgnorth | Business | Published:

In The Handmaid's Tale, a cashless society was the precursor to a totalitarian state where millions were sentenced to a life of servitude.

Potato seller Neil Rogers – cashless society would be a mistake

And a report this week warns that the cashless society could be with us within seven years, with the age-old system of notes and coins on the verge of collapse.

Many young people, for whom contactless payments and mobile phone apps are second nature, will doubtless see this as a logical progression. After all, there is hardly a clamour to return to the days of pawn-broking and the gold standard. But the Access to Cash Review warns there could be unintended consequences, not least for the eight million people who still see cash as a basic economic necessity.

While not quite forecasting the dystopian future predicted by Margaret Atwood, the Access to Cash Review warns that a cashless society would mark a sea-change in the way we live our lives – and that there could be unintended consequences.

Natalie Ceeney, the independent chairman of the review, says there are worrying signs that our cash system is falling apart.

"ATM and bank branch closures are just the tip of the iceberg, underneath there is a huge infrastructure which is becoming increasingly unviable as cash use declines," she says.

"If we sleepwalk into a cashless society, millions will be left behind."

Neil Rogers, who keeps the Spudley Street potato van in Wolverhampton, trades entirely in cash. He believes a cashless society is probably inevitable, but thinks it will prove to be a major mistake.

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"It's the wrong way to go for me, personally," he says.

"The homeless rely on cash, a lot of people don't have cards at all.

"What about the people who have got no money, people who are, say, on the dole? When they have got cash in their hand, they know how much they have got and how much they are spending."

The 58-year-old says most of his customers accept he does not accept cards, and says leasing a card machine would be just another expense.

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For Sally Powell, who sells jams, pickles and preserves on Bridgnorth's outdoor Saturday market, almost all of her business is done in cash. She warns that a cashless society would have serious consequences for small businesses such as hers.

Miss Powell says the seasonal, low-price nature of her products means it makes little sense to lease a card machine.

Unreliability

"My products are very low cost, jams and pickles, and most of my business is done at Christmas time," she says.

"From January to March, trade is very poor, but the card machines have to be leased for at least a year. So I would be paying all year round for a machine, just for the Christmas trade."

Another problem for traders like her is the unreliability of phone signals which the machines depend on.

"When you do trade shows, sometimes the phone signals are not very good. I do the Christmas market at Much Wenlock, and the intermittent service signal would be a problem."

Miss Powell adds that while contactless payments are swift and efficient, increased use of chip-and-pin payments could lead to longer queues at her stall.

She warns that if Britain became a cashless society in years to come, it could mark the end of many artisan cottage industries.

"A lot of these will be retired people working for some pocket money, and in those sort of industries it might not be worth carrying on," she adds.

The Federation of Small Business is concerned about the impact it could have on its members.

Mike Goodall

Mike Goodall , development manager for Shropshire, says: “Cash remains a necessity for 25 million consumers across the UK.

"In this area, lots of small businesses – especially those in more rural locations, the hospitality sector and tradespeople, still have customers that prefer to use cash. That’s why locally and nationally we need to offer choice.

"That means retaining bank branch and ATM networks which are fit for purpose and which meet local businesses and communities needs”.

Today, cash is only used for three in every 10 transactions, down from six in 10 just a decade ago, and is forecast to fall to just one in 10 within 15 years.

Miss Ceeney says: "This is placing significant strain on the UK’s cash infrastructure which currently costs around £5 billion a year to run.

Pressures

"As bank branches and ATMs continue to close, the economics of handling and accepting cash will lead to an increasing number of retailers to go cashless."

The report says that, given these pressures, the Government cannot afford to leave access to cash to market forces.

She is not alone in her concerns. Caroline Abrahams, director of Age UK, warns that 'drifting towards a cashless society' would inevitably cause anxiety and problems for millions of older people.

“Many older people regard cash and cheques as reliable and straightforward ways to pay for goods and services, as well as an effective way to manage their weekly budget," she says.

"Being able to access their cash directly helps them to stay independent and retain control of their finances, whilst also lowering their risk of being defrauded."

Kay Bennett, of homeless charity Stay

Another group which could be vulnerable to the end of the cash system could be the homeless, although Kay Bennett of the charity Stay believes that will not be as serious as on might think.

"Most of them will have had homes, and they will still have bank accounts registered with their old address," she says.

"We don't encourage people to give homeless people money anyway, we recommend they buy them food or drink, which they will be able to do with their cards."

From the Government's point of view, the advantage of moving towards a cashless society are obvious: it will make crimes such as drugs, prostitution, handling stolen goods and tax evasion far more difficult, although it is inevitable that black marketeers will find new ways to circumvent the system.

Option

But there is a darker side to a cashless society, which even the tech-savvy millennials will find hard to stomach – the amount of power it will hand to the banks. By taking away the option for people to store their wealth in cash, banks will be free to impose negative interest rates on their customers, charging them for the privilege of handling their money.

Customers who the banks do not consider profitable may find themselves themselves with nowhere to go. And with the ability to monitor your spending habits in precise detail, it will boost the already lucrative industry of selling personal data for marketing purposes.

In short, every penny we spend will leave a paper trail behind it. Not quite The Handmaid's Tale, but many will find that a high price to pay for a bit of extra convenience.

Mark Andrews

By Mark Andrews
@MAndrews_Star

Senior news writer for the Shropshire Star specialising in in-depth features and commentary, investigative reporting and political matters.

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