Are we heading towards a cash free economy?

Perhaps, like me, you’ve been wondering if cash will die out and be replaced by debit/credit cards and online currencies like Bitcoin, and whether we might need to find other cash free ways to pay.

The COVID-19 pandemic has had a significant impact on the way we pay for things and transfer funds, partly to reduce touch points and potential infection, as well as reducing the need to visit the bank. Cash transactions have decreased because non-essential shops were closed for long periods and some felt safer staying at home and shopping online.

Even before the pandemic, my local pub was reputed to be the first cash free pub in the country. Their main reasons for going cashless are:

• It saves money
• It’s faster
• It saves time; no need to cash up and pay cash into the bank
• It’s safer, less security needed and no potential theft
• It’s more hygienic

To survive since the first lockdown, many businesses have followed suit.

Personally, I rarely use cash nowadays (but I do need it for my local Chinese restaurant as it only takes cash!), because using the technology at my fingertips reduces the need for me to carry cash.

A further reason for a cash free economy is the environmental impact of banknote production, although the new polymer notes do have a lower carbon footprint than their paper predecessors. Bank and credit cards are normally made of plastic, but some banks have introduced biodegradable alternatives. The majority of people have at least one card and many continue to use banknotes, so to reduce these methods of payment could have eco-friendly advantages.

Interestingly, there has been a rise in the use of digital currencies, such as Bitcoin, which can be bought via electronic transactions, and are yet another step away from using cash.

However, despite the increase in these cashless transactions, the Bank of England confirms that banknotes and coins will continue to be used, with a current £70 billion worth of notes in circulation (roughly twice as much as a decade ago).

In conclusion, I don’t think we’re heading towards a cash free economy, but we’re certainly seeing an increase in cash free transactions, so we need to make sure we have our cards or tech at the ready, so we don’t miss out!

If you have any questions about this or a tax-related matter, please get in touch with your usual contact. You can find contact details on the Our People section of the website. Alternatively, call 0330 024 0888 or email enquiry@larking-gowen.co.uk

Peter Glading