While the focus has often been on the elderly’s challenges amid the shift away from physical currency, other demographics like tourists could also face repercussions.
Armando Bordalo e Sá meticulously prepared before his five-day summer visit to London, converting euros to pounds at a favorable rate for covering expenses like meals and event tickets.
However, as his brief stay unfolded, he encountered an unexpected issue. Many establishments no longer accepted cash, leading to his unused currency and unexpected bank charges from Portugal. The rapid transition to a cashless society in the UK took a toll on the 72-year-old traveler from Lisbon.
His attempts to use his Oyster card were limited to his debit card, while attractions like Tate Britain and several museums only facilitated electronic payments. Even a simple purchase, like an £8 adapter from his hotel’s vending machine, required card payment.
Upon his return to Portugal, he discovered an irksome surprise: his bank imposed a 4% fee for “international services” and levied additional taxes on debit card transactions due to his inability to use cash. This accumulation resulted in a total of €85 (£73).
This unexpected bill was particularly vexing since he had cash on hand for payment. He expressed his frustration, noting that he could only employ physical currency at restaurants, pubs, and taxis, perceiving this as a strategy for banks to generate profit.
The UK has spearheaded the transition towards a cashless society, a trajectory accentuated in metropolitan areas, especially post-pandemic. Data from UK Finance, a banking entity, reveals that nearly half of all payments were executed via debit cards in 2021. Newer payment methods are expected to eclipse cash almost entirely within the next decade. Their projection suggests that cash will constitute merely 6% of all UK payments by 2031.
Nonetheless, this transition has sparked concerns regarding segments that still favor cash usage, including older individuals, those with limited incomes, and individuals seeking precise expenditure control.
Moreover, other groups, such as tourists, have also emerged, advocating for a system that accommodates both cash and card transactions.
The Federation of Small Businesses highlights that individuals, similar to Bordalo e Sá, are keen on evading the additional charges imposed by banks.
According to FSB National Chair Martin McTague, these individuals lack the convenience of online shopping and value the personalized experience of selecting souvenirs in physical stores. He contends that the elimination of cash usage and tax-free shopping conveys an unfavorable impression of our business preparedness and curtails the enthusiasm for spending among visitors.
Higher Expenses for Cash Usage Critics emphasize that the shift towards a cashless society has introduced a concern: the increased financial burden faced by those who rely on cash for their preferred transactions. In the scenario of the Portuguese traveler, this translated to a sum of £73.
Sian Williams, Vice-Chair of the Financial Inclusion Commission, underscores that engaging in activities of personal significance now incurs greater costs. She labels this as another dimension of the “poverty premium,” affecting countless individuals daily within the country.
The independent panel of experts, represented by the commission, advocates for the retention of cash and its accessibility for as long as it remains a necessity. They recognize its pivotal role as a payment method for various individuals in vulnerable circumstances.
Reported last year by the Royal Society of Arts (RSA), more than 10 million individuals in the UK would encounter challenges in adapting to a cashless society, potentially losing control over their finances and experiencing a surge in debts.
Mark Hall, the lead author of the “Cash Census” study, points out a significant contingent of younger individuals who value the security offered by physical currency. Particularly, those with lower or unstable incomes expressed a preference for cash due to its aid in budgeting and easy tracking.
Another segment, despite possessing debit cards, reverted to cash as a method of closely monitoring their expenses. Their approach allowed them to manage their cash flow more effectively.
In the progression toward a cashless society, older individuals often face isolation. Age UK, a charity, notes that in London, where many services have become cashless, numerous older people express frustration.
Abigail Wood of Age UK London mentions, “In larger cities, the pace of transition to a cash-free model has left many even further behind.” She adds that older individuals often perceive cash as the most dependable and straightforward payment method, vital for managing tight budgets.
Hall also identifies another group, termed “cashless sceptics,” typically older, who harbor concerns about fraud and might find technology usage challenging.
