Coins and banknotes could disappear from the UK by 2026 as the coronavirus pandemic has accelerated "the journey to a cashless society," a new study suggests.
New COVID-19 measures meant that retailers and shoppers across the country have been opting for card payments or and e-wallets over cash during the pandemic, to limit contact and curb transmissions of the virus.
As a result, cash usage fell by 38.1% between 2000-2020, with the UK predicted to be cashless by 2026, according to Merchant Machine.
The number of cash withdrawals in the UK drop by 22% in the last decade. There were only 2 million withdrawals in 2019 — a 9% decrease in the volume of ATM usage made by UK cardholders from the previous year.
Between 2019 and 2020, 8% of free-to-use cashpoints were closed in the UK, leaving around 24% of bank machines charging Brits to withdraw their own money. Despite this, 96% of cash withdrawals at UK ATMs made by cardholders still remain free of charge.
Cash usage dropped from 50% in 2004 to 14.96% in 2019. Merchant Machine says that using "forecast linear data" they can "predict that cash usage in the UK will reach 0%" by as soon as 2026.
A 2019 report by an independent group reviewing consumer spending, Access to Cash, found that 34% of the UK population use cash because they like a choice when paying for things and a further 20% feel more in control of their money when using cash.
But, the trend towards a cashless society is not desired by all Britons.
The same report found that 47% of the UK said that they would find it problematic if there was no cash. A further 17% stated that they were unsure of how they cope or if they would be able to cope at all.
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In the UK, there have been repeated calls to protect, which were mainly motivated by social inclusion concerns and even nostalgia.
Data from YouGov, analysed by MoneyTransfers.com, revealed that only 26% of Brits would welcome transitioning to just electronic payments.
Ian Wright, founder of Merchant Machine said: "The decline of cash usage around the world represents the increase in payment technologies and the changing attitudes in both consumer and businesses. However, this study shows that not all countries are ready to make the full move towards a cashless society.
"Many people are still making paper transactions despite the decline of cash machines available. Therefore, it’s important to consider those who feel uncomfortable with digital payments platforms as we move further and further away from cash."
It comes as chancellor Rishi Sunak announced during the budget, earlier this month, that the legal limit on contactless payments will more than double to £100 ($139.70).
The increase in the limit is intended to boost the struggling retail sector and make it easier for Brits to part with their cash for goods in-person. The limit increase comes after the Financial Conduct Authority (FCA) held a public consultation on contactless payment limits and recommended the change.
Machine Merchant's study also revealed Romania as the country most reliant on physical cash, with over 70% of payments made in cash. It said that nearly half (42%) of the Eastern European country population is unbanked showing that many of the citizens still cling to notes and coins.
In comparison, Norway where only 3% of transactions were made using cash. The research found that, while there are only 31.6 ATMs per 1000 adults, 100% of the population in the country own a bank account.
There has also been a rise in digital wallets, also known as e-wallets during the pandemic.
E-wallets allow users to make cashless payments via a wearable device such as a smartwatch or their mobile phone, with companies such as Alibaba (BABA) owned Alipay, WeChat, Apple's Apple Pay (AAPL), PayPal (PYPL) and Samsung's (BC94.L) Samsung Pay payment platforms among the top 5 with most active users.
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