British consumers are ready to embrace a cashless future

The pandemic has rapidly accelerated the UK’s progression towards becoming a cashless society, according to our latest survey of 1,000 working-age consumers.

More than half the population (53.5%) now agree they prefer to carry out cashless transactions, which has risen from 35% the last time we asked, in January 2020. Prior to the pandemic, the majority of people disagreed that cashless was best (38%), but this attitude has now switched and only 19% disagree.

Just 16% of Brits say cash is their favourite way to pay for things in real life, down from 20% pre-pandemic. Meanwhile, contactless payment options have received a boost, with 56.5% of people preferring to pay with a contactless card (up from 48%) and 17.5% preferring to pay with a contactless device (up from 16%). Preference for chip and pin card payment has fallen from 17% to 10%.

Only 16% of Brits prefer to pay with cash

People are even eschewing cash when it comes to paying friends and family; only 21% chose this option, with the remainder opting for digital payment either by bank transfer (59%) or a mobile payment app (20%).

The pandemic has clearly changed the way people pay for things – indeed, 43% say it’s changed their behaviour a little bit and 27% say it’s changed it a lot. 

So, why the change?

During the pandemic, some retailers began refusing cash on the basis that it posed a risk for catching COVID-19. While most businesses have been forced to make a U-turn, the idea that cash is unhygienic has stuck with some consumers. Nearly 18% cite hygiene as the reason they prefer to use a digital payment option – although that’s not the driving factor behind this change.

The biggest reason people prefer to use a card or device is because they find it more convenient (63%), with 47% saying they tend not to carry cash on them. And a third of Brits like digital payments because it means they can keep track of what they’ve spent. 

Other reasons given include worrying about being shortchanged or losing money (16%), taking advantage of benefits offered by payment providers (15%) and being able to build a credit score through card usage (8%). 

Even the way we pay for things online has altered over the last 18 months, with an increase in adoption of digital wallets such as Apple Pay and Google Pay. The percentage of people who say a digital wallet is their favourite way to pay for things online has grown from 8% to 12% (and this rises to 25% of people aged 18-25).

Although, interestingly, we also see a marked decline in preference for online payment services like PayPal (down from 38% to 28%), with people opting for credit or debit cards instead (up from 48% to 54%). Perhaps confidence in cards has increased thanks to the rollout of ‘Strong Customer Authentication‘, which requires card issuers to add extra security checks?

Are we ready for a cashless society?

Sweden has already declared it will become the first cash-free society in 2023, but it looks like the UK might not be too far behind. Our data finds there are more people in favour of a cashless Britain than against it; 43% agree that they would welcome a cashless society, while 35% disagree. A further 22% are on the fence. 

51% of Gen Z would welcome a cashless society

Younger generations are especially in favour of going cashless, with 51% of both the Gen Z (aged 18-25) and Millennial (aged 26-40) demographics agreeing they would welcome it. 

Why we want to go cashless

While going cash-free seems convenient to many, for some, the prospect is frightening. Age UK has warned that 2.4 million people aged 65 or over are at risk of societal exclusion due to declining access to cash. But it’s not only pensioners who want to cling on to cash, there are people in all age groups who see benefits in hard currency. 

Who still uses cash?

According to our survey, 16% of Brits aged 18-65 prefer to pay for things with cash, with Gen X (aged 41-55) showing the most preference for it (20%). The main reason they give is that it helps them to avoid overspending (49%), while 41% of people find cash to be more reliable. 

Security concerns are higher among the older demographics, with 48% of Boomers (aged 56-65) choosing cash because it protects them from fraud, and 40% of Gen X not wishing to share their data. Meanwhile, Gen Z over-index for using cash because they don’t have other means of payment (10%), and Millennials over-index for using it because they get paid in cash (18%).

However, it’s the Boomers who are most likely to object to the idea of a cash-free UK; 48% disagree they would welcome a cashless society. People in this demographic are also the most likely to agree they always carry cash on them; 58% in comparison to 37% of Gen X, 38% of Millennials and 42% of Gen Z. 

Why we need to keep cash

The FinTechs making a cashless society possible

The concerns that people have about going cashless are important, but over the last 18 months, we’ve already seen a host of innovations aimed at making a cashless society more inclusive.

SumUp and Zettle offer mobile card readers for small businesses and sole traders with no monthly fee, meaning even Big Issue sellers can now accept card payment. And with Tomato Pay you don’t even need a card reader to take payment; you can simply generate a QR code on your phone. 

Another FinTech company, CleverCards, allows businesses and government departments to instantly send digital pre-paid Mastercards by SMS, WhatsApp or email. This means people without a bank account can receive money – and spend it digitally.

Meanwhile, Starling Bank launched the Starling Connected card during the pandemic, which vulnerable people who are self-isolating can give to volunteers to pay for their shopping, in a safe and secure way.

Indicating that the government is also eyeing a cashless future, Chancellor of the Exchequer Rishi Sunak recently announced the £375m million Future Breakthrough Fund. The fund will support UK FinTech startups with research and development that can accelerate deployment of disruptive technologies. 

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