# The case for cashless
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2020-03-26
Category: BANKING
Category URL: https://financedigest.com/category/banking
Meta Title: Exploring the Future of Cash: Bank of England Considers
Meta Description: Explore the implications of digital banknotes and the decline of physical cash in the UK. Discover the benefits and challenges of a cashless society.
URL: https://financedigest.com/the-case-for-cashlesshtml

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_By **Dave Murphy,** Managing Partner, Financial Services – EMEA & APAC, Publicis Sapient_

As the Bank of England weighs up the introduction of digital banknotes – a way for consumers and businesses to pay electronically without having that information go via a fintech or banking business – the question rears its head once again: are we headed for a cashless society, and would that be a good thing? Notes would not be the same as digital cash such as that stored in digital accounts, which is an electronic representation of physical money, it would be a total replacement for notes and coins – although the two could be interchangeable. Although just a possibility for now, it does throw into sharp relief the declining influence of physical tender versus the ability to spend electronically.

It has been suggested that by 2026, use of [cash will be so low](https://www.financedigest.com/monte-dei-paschis-cash-call-93-covered-so-far-despite-low-shareholder-take-up.html "Monte dei Paschi’s cash call 93% covered so far despite low shareholder take-up") across the UK as to essentially end its prominence. Pointing to those without [bank accounts and suggesting that digital payments](https://www.financedigest.com/will-central-bank-digital-currencies-deliver-a-more-democratic-payment-industry.html "Will Central Bank Digital Currencies deliver a more democratic payment industry?") reduce financial access, many now call for regulation to ensure retailers, restaurants and bars must accept cash tender – and across the pond in New York this has become reality. The lawmakers argued that businesses that accept only credit and [debit cards are discriminating against New Yorkers who lack bank accounts](https://www.financedigest.com/community-fintech-11onze-to-launch-el-canut-a-super-app-offering-universal-banking-accounts-and-digital-debit-cards.html "Community fintech 11Onze to launch – EL CANUT – a super APP offering universal banking accounts and digital debit cards") and credit cards. Consideration too must be given to the community of SMEs, many of whom rely on cash usage, and [bank branches to pay](https://www.financedigest.com/why-pay-by-bank-app-will-come-into-its-own-in-2022.html "Why Pay by Bank App will come into its own in 2022 ") it in. Implications for them will be severe.

However, despite this,cash is no longer king – it’s inconvenient and sometimes unsafe. It can be lost and stolen. [Consumers are not able to redeem rewards points for cash and cannot automatically track spending](https://www.financedigest.com/as-consumer-spending-increases-convenience-and-security-have-never-been-more-important.html "As consumer spending increases, convenience and security have never been more important") habits to help with budgeting. Physical cash is one dimensional and lacks the multi-dimensional attributes of [digital payments](https://www.financedigest.com/eliminating-payment-barriers-the-future-of-supply-chain-payments-is-digitization.html "Eliminating Payment Barriers: The Future of Supply Chain Payments is Digitization"). What’s more – [people increasingly do not want or need](https://www.financedigest.com/people-need-people-humanising-the-digital-banking-experience.html "People need People – Humanising the digital banking experience") physical cash: nine out of every ten payments will be cashless in the UK within the decade. Already, only a [third of payments](https://www.financedigest.com/polands-bank-millennium-third-quarter-results-hit-by-payment-holidays.html "Poland’s Bank Millennium third-quarter results hit by payment holidays") are made in cash. This is even without the additional pressure that Covid-19 has applied to unnecessary germ-swapping, such as through coin and [note exchange](https://www.financedigest.com/the-health-information-exchange-market-to-grow-on-a-satisfactory-note.html "The Health Information Exchange Market to grow on a satisfactory note").

Technology has allowed a chance to escape a cumbersome [system developed](https://www.financedigest.com/britain-launches-trade-system-for-developing-countries.html "Britain launches trade system for developing countries") in the middle ages that is no longer fit for purpose. With many financial applications today bundling spending habit reports, savings, checking, credit card usage, savings loan and [credit score](https://www.financedigest.com/benefits-of-a-good-credit-score.html "credit score") all in one easy and secure place, the advent of mainstream fintech has enabled a unique opportunity to develop financial literacy regardless of background, age or current financial circumstances. What’s more, it provides stability sometimes not afforded by physical tender. For example, [inflation rates](https://www.financedigest.com/boes-bailey-speaks-about-surging-inflation-and-rate-hikes.html "BoE’s Bailey speaks about surging inflation and rate hikes") in developing economies like Venezuela are so severe it is impossible to use cash to pay for any daily purchases like groceries or clothes. Introducing [digital payments has been critical as a financial resource for a country whose](https://www.financedigest.com/whose-role-is-it-anyway-why-finance-underpins-data-led-digital-transformation.html "Whose role is it anyway? Why finance underpins data-led digital transformation") people simply cannot withdraw enough cash to keep up with inflation.

The cost of maintenance of a little-used cash system will become increasingly debilitating over the [coming years](https://www.financedigest.com/mena-infant-milk-formula-market-to-record-exponential-compound-annual-growth-rate-in-the-coming-years.html "Mena Infant Milk Formula Market to Record Exponential Compound Annual Growth Rate in the Coming Years"), with fewer use cases for cash and a therefore cumbersome system of infrastructure to maintain for little obvious benefit. It is therefore crucial that banks and fintechs work to bring those without bank accounts and the elderly into the fintech ecosystem – the Bank of England’s [digital notes](https://www.financedigest.com/the-pulmonary-renal-syndrome-treatment-market-to-replenish-on-a-digital-note.html "The Pulmonary Renal Syndrome Treatment Market to replenish on a digital note") perhaps being a good starting point here.

The repercussions for organised crime and fraudulent activities are also significant in a digitally managed system, [providing both a more secure currency – less liable to loss – and less room](https://www.financedigest.com/comparative-analysis-of-the-best-data-room-providers.html "Comparative Analysis of the Best Data Room Providers") to hide huge portions of extra income.

As the world becomes digital-first, our payments system must reflect this. Digital payments are an opportunity for inclusion, for increased financial literacy and for long-term [economic](https://www.financedigest.com/uks-finance-minister-sets-out-new-economic-approach-to-finance-bosses.html "UK’s finance minister sets out new economic approach to finance bosses") stability. Banks and governments alike must embrace this and [prepare for a digitally enabled economy](https://www.financedigest.com/five-ways-businesses-can-prepare-themselves-for-the-digital-economy-be-kaler-pilgrim.html "Five ways businesses can prepare themselves for the digital economy – Be Kaler Pilgrim") accordingly.


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