Mobile payments technology is coming to the UK in a big way. © HLundgaard

Big ideas of 2015: the end of cash

Cash still rules in the UK—but only just
December 10, 2014
Read the rest of our big ideas of 2015

Cash still rules in the UK—but only just. Fifty-three per cent of transactions were made using notes and coins in 2013. The UK Payments Council expects 2015 to be the year when cash payments become less than half.

Other countries are already there. In Canada, just 10 per cent of transactions are made in cash. In Sweden, where the figure is 20 per cent, even the homeless street sellers of Situation Stockholm (the equivalent of the Big Issue) are now equipped with card readers. In October, Denmark’s central bank announced plans to stop printing its own cash (outsourcing the production instead), saying that: “Society’s demand for new banknotes and coins has been falling for years, and [we have] no expectations that the trend will be reversed.”

Cash has been losing out to card payments since the 1960s—but even the physical chip-and-pin card may be reaching its peak, the Payments Council predicts, as contactless and mobile technologies take over.

This year, 16 high street banks, including NatWest, Barclays and Royal Bank of Scotland, signed up to Paym, allowing their customers to send and receive payments through their mobile phones. PayPal, the online payment service, processes about 10m transactions a day globally and there are more than 157m active users of its “digital wallet”—an app that stores bank cards and a balance to allow users to pay in shops and restaurants simply by showing the cashier their phone. As of July, buses in London accept only contactless payments.

Proponents say the technology will reduce queues and transaction costs, and embedding payment systems in phones has the benefit of being able to interact with apps—for example, to track spending and help manage budgets.

Security concerns still need to be addressed: if someone can get a reader within a few centimetres of your card, they could take a transaction without you knowing—although, according to Martin Emms, a researcher at Newcastle University, the contactless technology used in the UK and Europe is much more secure than the version used in the US. Mobile payments, he says, are safer still, since they require you to enter your pin before payment. Others worry that a rapid shift towards digital transactions will disadvantage those who do not have easy access to the internet or a smartphone.

But innovations continue. The coming year will see the nationwide launch of Barclays’ bPay, a wristband linked to a wearer’s bank card; while Apple Pay, through which an iPhone can be used as a contactless debit card via a built-in chip, will be rolled out across Europe.