Now and again I receive a letter from a constituent concerned that they have been unable to make a payment to a local business using cash. Sometimes this has turned out to have been a misunderstanding and a cash option is available.
But some businesses, or some of their branches, do now display the sign ‘cards only’ (or cards and phones). Digital payments are in the ascendancy, and a switch that was made by some outlets during the COVID epidemic has endured.
Ultimately businesses determine the payment methods accepted. There can be misunderstanding about the meaning of ‘legal tender’, which the Bank of England explains has a very specific technical meaning: if you offer to fully pay off a debt to someone in legal tender, they can’t sue you for the debt. But that isn’t relevant most of the time. Some very common methods of payment – like debit cards or contactless – are not in fact legal tender, but that is not of practical significance either.
The term ‘cashless society’ seems to have been around about as long as the term ‘paperless office’, but of late there has been rapid change.
I’m (just about) old enough that my first wage packet came in one of those envelopes with the little round holes in it so you could count the banknotes without breaking the seal. Bank transfers for pay, and state benefits, are long established now.
Still, it wasn’t that long ago that the majority of payments were made in cash. It is in the last ten years that online payments have jumped from 45 per cent to 85 per cent.
Like many, I appreciate the convenience of tap and go payments, and like many, I find myself using a cash machine less and less often.
But there is something more immediate and real-feeling about cash. The physical manifestation of money can assist with budgeting. And when we teach our children about money, it is easier to make it come alive with notes and coins than with e-payments and online balances.
On the other hand, not walking around with cash, and not having cash at home, can have benefits for crime reduction. At the Serious Organised end of crime, less cash means cash money laundering – on which the drugs trade, for example, relies – has been made that bit harder. On the flip side, there is more complex fraud and online scams.
It’s true that many buskers and street vendors now take contactless payments. Some church collections too. But many charities can find it harder, and some community and voluntary organisations find cash (and indeed cheques) more straightforward.
Like many changes, the decline of cash is neither all-good nor all-bad, but it definitely brings its own issues. And the issues are unevenly felt. Obviously those least comfortable with the online world can be most affected.
We do need to make sure people can readily access their money. It is here where last week’s announcement by the Government on access to cash will help. This is to ensure that those living rurally should not have to travel far to withdraw or deposit their money. The Financial Conduct Authority will have the power to fine banks and building societies that do not enable this.
In writing my column this week, I am aware of a big, related issue, which is the closure of so many of our bank branches in East Hampshire and elsewhere. This is not only about the move from cash but broader societal changes and the use that almost all of us make now of call centres and, especially, online banking.
Still, not only does it impact the vibrancy of our high streets, it also diminishes options for over-the-counter transactions and seeking advice about banking matters. It is essential that this does not lead to an increase in financial inclusion and this is a subject I will return to in this column.