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How the tables have turned! After years of being pampered to pay for goods and services through card transactions, cash and its importance have taken center stage.
Last week, the fragility of the global financial payments system was clearly demonstrated.
One of the worst cyber disasters happened in the blink of an eye, meaning many shops, restaurants and supermarkets were unable to accept card payments.
For me, it was like an “I told you so” moment. Years of harping on about the importance of holding on to cash and occasionally being mocked for believing in the importance of keeping it alive.
Spend more cash! Not all transactions have to be with physical money, but in my opinion, it should represent a part of your monthly spending.
“Waitrose is a war zone,” my wife told me on Friday morning after passing the Billericay shop. “It’s back to the old way, they only take cash. Do you know what’s going on?”
He had cash in his wallet. In fact, we both carry cash with us all the time for various reasons.
First, computer crashes and banking outages are not uncommon. Much of the infrastructure currently in use is decades out of date, with many moving parts and creaky patches everywhere.
I’ve been reporting on banking outages for years, and who can forget that epic Visa crisis in 2018. Human error and IT issues can happen on a massive scale.
John Howells, chief executive of Link, explained to me: ‘After many years of seeing signs in shops encouraging customers to pay by card, it was perhaps a shock to many in shops like Waitrose and Gail’s that for a time only cash was accepted.
‘Payment systems like Link, Visa and Mastercard worked fine, but that doesn’t help if other parts of IT, like cash registers, don’t work properly.
“This shows that much more needs to be done to ensure that the technology we all rely on is robust and that we cannot afford to go without cash unless we are confident of it.”
Second, I like to take out some cash on payday. I use it as a reserve money for fun, for my uncontrolled and off-the-grid spending, and it seems like cash is coming back from the dead, even before last week’s madness.
In fact, 1.5 million adults used cash as their primary spending method last year, according to new data from UK Finance – the first increase since 2019.
According to the report, this can be attributed to the cost of living crisis, as more and more people are turning to cash to budget. Only 900,000 people used coins and notes as their primary spending method in 2022.
But its future is not yet guaranteed. Cash use fell last year to account for 12 per cent of all payments, and UK Finance says 22 million adults “do not primarily use cash”.
King Cash: While we’ve become accustomed to ‘card only’ signs in some shops, cafes and restaurants, the collapse of technology has highlighted the need for cash – this is what Costa Coffee in Southend had to say on Monday
Which brings me to point number three: I still use cash for some purchases because I don’t want to see it die.
How we pay for items should be a personal choice, and both digital and non-digital options should be available. It bothers me when I see a sign that says “card only.” Again, it’s an issue I’ve been open about in the past.
So I had a laugh on Monday when I walked into Costa Coffee on Southend High Street and saw a sign: ‘Apologies, our card machine is broken, please ask a member of our team who can direct you to the nearest ATM.’
Recently, at another Costa, I tried to pay cash because I needed change for parking (the parking app wasn’t working and the parking lot only accepts coins).
My friends often laugh at me when I say that I still believe in using cash, as if it somehow makes me stuck in the past. I use my card for most transactions, but I make sure every month that it’s not for EVERY payment.
When I ordered a coffee and tried to pay in cash, I was treated like an alien and told it wasn’t possible. Why would a shop not want my physical money? Can they really be that picky?
My friends often laugh at me when I say that I still believe in using cash, as if that somehow makes me stuck in the past.
I use my card for most transactions, but I make sure every month that it’s not for EVERY payment. And, as I’ve explained before, I like my 5-year-old daughter to see physical money, rather than it being just an invisible concept, a magical bottomless pot somewhere out of sight.
In 2018, I commissioned Natalie Ceeney (former Financial Ombudsman and independent chair of the Access to Cash Review) to write a piece on how the collapse of coins and notes might play out.
Much of what is said in this article has turned out to be eerily accurate, and late last year he wrote a companion piece for us: Could Physical Cash Soon Be Extinct? The answer to some of these questions lies in the hands of regulators.
Fortunately, this week the FCA revealed that the Government had given it new powers to ensure reasonable access to cash withdrawals and deposits.
Under the new rules, banks and building societies must assess whether local communities lack access to cash services such as branches and ATMs, and provide additional services where they find “significant gaps”.
It’s a step in the right direction, but it’s still up to us whether we use it or lose it.
Mr Howells says the collapse of IT shows the “importance of cash as an alternative”.
He points to research from Link showing that the most common reason people now carry cash is if they can’t use cards. This shows that more people are expecting crises like the one we saw on Friday.
He added: “I hope that policymakers and regulators will now be much more demanding about how technology companies demonstrate resilience.
‘Meanwhile, cash remains vital for millions of people and essential if other systems stop working. Even as people are moving away from cash, our network is still issuing £1.6 billion a week.’
But parts of London and the east of England could be left without ATMs within the next two years if the current trend of closures continues.
Do you really want that to happen in the name of “convenience”?
If the answer is no, go to an ATM and start using cash, like you used to do…
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