Is the Dough about to go Dry?
There’s an age-old saying, “Cash is King”, but in today’s tech-heavy society, does it still hold its regal position? A well crafted experiment by Handepay in the UK, showed that maybe we should be banking on the death of cash.
For one day, more than 30 independent retailers in a suburb of Manchester attempted to trade – as much as possible – without accepting notes or coins, an experiment dubbed the “Cashless Street”. This followed research from the British Retail Consortium which showed cash use in the UK had fallen by 14% in the last five years.
This trend isn’t just showing in the UK, the US is seeing it too. In fact, the 2013 Federal Reserve Payments Study indicated that payments are increasingly becoming card-based, with the number of card payments growing by 17.8 billion from 2009 to 2012.
Results of the Cashless Street were positive, with traders reporting that business was up by an average of 22% on the day as they processed an average of 28 per cent more card transactions.
The revolution is well underway. A survey of 2,000 Brits by Kalixa Pro found that UK shoppers love their plastic cards, with 82% preferring to use their cards for purchases over £20, and a quarter of them have changed where they shop because a shop or tradesman was unable to process card payments.
Cash is becoming a deterrent to shoppers and a headache for merchants, something MasterCard has recognized in the Brazilian economy. Richard Hartzell, President, International Merchants and Acceptance Development at MasterCard wrote last year wrote in the Huffington Post about cashless payments, noting that a street side trader who began accepting card payments was losing fewer sales and doubled his monthly income. Furthermore, Hartzell noted that the benefits extended to better protection for merchants – his Brazilian street trader had to worry less about theft when he wasn’t carrying cash.
The situation is far from grave, however, according to an April report by the San Francisco Federal Reserve Bank, cash is still the preferred method of payment in 40% of consumer transactions. Even in the UK, just 57 % of Brits believe that they are not ready for a totally cashless society.
Robert Jordan once wrote, “Almost dead yesterday, maybe dead tomorrow, but alive, gloriously alive, today.” Cash is still king, but for how long?