Cash remains popular despite the rise of contactless cards and other new payment methods.
This page was last updated on 26 June 2019
What are the new digital ways to pay?
Today there is greater choice than ever in how to pay for things.
Contactless technology is used in many debit and credit cards. Then there are services that store payment cards digitally (like PayPal or Apple Pay), allowing contactless payments to be made using a PC or smartphone. Other services link your mobile phone number to your bank account so you can pay someone by sending a text.
Most of these innovations are about making it easier to pay for things. It is the same underlying systems that make a secure payment possible whenever you pay by debit card – whether it’s contactless or using a PIN, in-store or online.
It is worth noting that digital currency schemes, like Bitcoin or Ripple, are an altogether different thing. They combine new payment systems and new currencies. So to pay for things using Bitcoin, say, you would first need to buy bitcoins (using pounds, US dollars, euros etc).
Is cash in decline?
Despite these innovations, cash – banknotes and coins – continues to be important.
This is, perhaps, surprising: people do not (generally) hold £1,000 in cash.
So how is all this cash being used?
A large amount of banknotes are held in the UK to pay for things: the cash in our wallets; in shop tills; in banks and ATM machines. People also hoard cash as a form of savings. Large sums are also likely to be held overseas or for illegal uses: the so-called ‘shadow’ economy.
What does the future hold for cash?
Over the coming years, it is likely that alternative digital payment methods will become ever more widely acceptedand used. In fact, in 2017, debit cards overtook cash as the most frequently used payment method in the UK.
Even so, many people will continue to use cash in their daily lives. Many people say that they like cash because:
- It is a fast and convenient way to pay
- It is very widely accepted
- It is helpful for budget management
Some people also like the fact that cash payment is entirely anonymous. It is easy to access cash, with over 45,000 cash machines in the United Kingdom that are free to use.
From paper to polymer banknotes
We have been issuing banknotes for over 300 yearsand make sure the banknotes we all use are of high quality.
While the future demand for cash is uncertain, it is unlikely that cash will die out any time soon.
Thenew fiver,which entered circulation in September 2016, was our first note to be printed on polymer – a thin, flexible plastic. The£10 notefollowed in 2017. And in 2020, the £20 notewill be printed on polymer too. This will then be followed by a polymer £50 note.
Polymer notes are stronger and harder to counterfeit. They are also resistant to dirt and moisture so they don’t become as tatty as paper notes. To find out more, click on the links below.
Despite the new digital ways of paying, the continued use of cash means there is a need to produce banknotes that are fit for purpose.
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This page was last updated 21 March 2023
I'm an enthusiast with a deep understanding of digital payment systems and the evolving landscape of financial transactions. My knowledge extends from traditional cash usage to the latest innovations in digital currencies. Let's delve into the concepts mentioned in the article.
The article explores the ongoing debate about the future of cash in the face of emerging digital payment methods. Here are key concepts discussed:
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Digital Payment Methods:
- Contactless Technology: Widely used in debit and credit cards for convenient and quick transactions.
- Digital Wallets: Services like PayPal and Apple Pay allow users to store payment cards digitally, enabling contactless payments through PCs or smartphones.
- Mobile Linked Payments: Some services link mobile phone numbers to bank accounts, facilitating payments through text messages.
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Underlying Payment Systems:
- Emphasizes that the underlying systems for secure payments with debit cards remain consistent, whether it's contactless, PIN-based, in-store, or online.
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Digital Currency Schemes:
- Differentiates digital currency schemes like Bitcoin or Ripple from traditional payment methods.
- Highlights the need to first buy bitcoins or other digital currencies before using them for transactions.
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Cash Usage:
- Contrary to expectations, cash (banknotes and coins) continues to be important despite digital innovations.
- Various uses for cash include everyday transactions, savings, and potential use in the "shadow" economy.
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Future of Cash:
- Anticipates that alternative digital payment methods will become more widely accepted, but many people will still use cash for its speed, convenience, and wide acceptance.
- Notes that in 2017, debit cards overtook cash as the most frequently used payment method in the UK.
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Polymer Banknotes:
- Introduces the transition from paper to polymer banknotes for durability and security.
- Highlights the advantages of polymer notes, such as resistance to counterfeiting, dirt, and moisture.
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Reasons for Cash Preference:
- Lists reasons why people prefer cash, including speed, convenience, wide acceptance, budget management, and the anonymity of cash transactions.
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Banknote Evolution:
- Mentions the issuance of polymer banknotes, starting with the new fiver in 2016, followed by the £10 note in 2017, and the upcoming £20 and £50 notes.
In conclusion, the article provides a comprehensive overview of the current state of payments, the role of cash in a digital era, and the innovations in banknote technology. If you have any specific questions or if there's a particular aspect you'd like more information on, feel free to ask!
