Jenny Ross: ‘Going digital’ not an option for everyone

The chaos that ensued from TSB's introduction of a new IT system last April illustrates that the move towards a cashless society does not come without risks. Picture: John Devlin
The chaos that ensued from TSB's introduction of a new IT system last April illustrates that the move towards a cashless society does not come without risks. Picture: John Devlin
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On which coin would you find the Prince of Wales’ feathers? That was one of the questions at a pub quiz I went to last week. I’m pleased to say that our team knew it was a 2p, but the follow-up challenge proved more problematic. A spot prize was on offer for the team who could produce the biggest collection of 2p coins, causing a look of defeat and mild confusion to flicker over my teammates’ faces. Between six of us, we could only muster three, while the spot prize winners scraped together eight.

The scarcity of coins in the room came as no surprise to anyone. I was more surprised to find that I did in fact have a small handful lurking at the bottom of my bag. After all, cash is no longer the default way to pay across the UK. In 2017, debit card payments overtook cash as the most popular form of payment for the first time. A decade ago, six out of every ten transactions were made with cash, compared to three in ten today.

There’s no denying cash is in decline, but it can be easy to overstate the shift towards digital payments.

For one thing, this is not happening at the same pace across the country. The 2p challenge took place in central London – if it was posed at the pub in my parents’ village in Devon, for example, I’m sure the spot prize would have been more hotly contested. I can’t imagine it being met with a chorus of “but I never have any cash on me”, as happened at the quiz I went to.

When you look at the data on cashpoint withdrawals, it becomes clear that some parts of the country are making the move away from cash more quickly than others. Withdrawals in London and the South East fell by 8.5 per cent and 7.7 per cent respectively in 2017-18, but the rate of change elsewhere has been more gradual.

In the North West, Scotland and Wales, withdrawals saw a drop of 3.3 per cent, while in Northern Ireland they fell by just 2.1 per cent. As you’d expect, London also has the highest proportion of people using contactless payments (the lowest is in the North West).

I rarely withdraw cash now, but can’t imagine going without it altogether. And I’m not alone. In a 2018 Which? survey, more than three in five (61 per cent) people said they felt negatively about the idea of notes and coins ceasing to exist all together, with three-quarters (73 per cent) saying they still use cash frequently to pay for goods and services.

Some 2.2 million people are entirely reliant on cash in their daily lives. Among them is Barbara Pointon, a retired lecturer. When I visited Barbara at her home in the Cambridgeshire village of Thriplow to discuss the issue of ATM closures, she explained that she “couldn’t live without cash”, and uses it to pay several people who help her around the home. She’s worried about the long journey she’ll have to make to access cash if her local ATM closes, and feels strongly that she should have the freedom to use the payment method that she prefers.

ATMs are closing at unprecedented rates. Between June and December 2018, 1,524 free-to-use machines disappeared – that’s 254 a month.

This is compounded by the acceleration of bank branch closures. The UK has lost two- thirds of its branch network in the last 30 years, with just over 3,300 branches having closed since 2015 (399 of these in Scotland).

Which? is concerned that this rapidly changing landscape will leave people struggling to access the cash they rely on – and not just older people like Barbara. In rural communities, poor broadband or mobile connectivity can pose a challenge for alternative payment methods, making cash more important.

We’ve also heard from small business owners, people on low incomes and those with disabilities who worry about being left behind. Disabled blogger Gem Turner, from West Yorkshire, told us that she would lose her independence without access to cash, and stressed the importance of realising that for many people there are still barriers to “going digital”.

Digital payments have many advantages – being able to tap and pay with your card, phone – even your watch – is amazingly convenient. But these systems are far from infallible. Recent analysis has found that leading banks are suffering at least one major security or IT glitch per week. Last year the Visa payments outage and prolonged issues at TSB caused chaos for millions of customers, providing a powerful reminder of one of the risks posed by the move towards a cashless society. Cash may be the horse and cart next to the sports car of digital payments, but it’s a valuable fallback when technology fails.

At Which? we believe that people should be able to pay in the way that suits their needs. That’s why we’ve launched a campaign called ‘Freedom to pay. Our way’, which is urging the government to appoint a regulator who will have a duty to protect access to cash for as long as people need it and to ensure that no one is shut out by the march towards digital.

Jenny Ross is Which? money editor