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Too early to cash out

Cash is a faff. It’s a faff for the people who have to spend it and it’s a faff for the stores who have to take it. According to Lloyds Bank’s current rates, a business with a turnover of up to £3 million has to pay a fee of £6.50 for their bank account and then a further £1 per £100 for the first £1,500 cash it wants to bank or withdraw and 80p per £100 thereafter, per month.

Then there are the costs inherent in cash loss (nefarious or just carelessness), staff training and storage, it all adds up. Cash is costly. Lloyds charge for electronic payments in the same business account? But they’re free.

The customer recognises the convenience of ditching cash too. No more hunting down the back of the sofa to get the right change for the bus – just tap and go. Standing in a muddy field, miles from nowhere surrounded by bands and street food vans and no ATM in sight? No problem. There are loads of mobile card payment technologies that let even the smallest festival retailer take contactless and PIN transactions.

So, cash is dead, long live the card…?

Actually, not so hasty. It is certainly true that we are heading towards a cashless society. I’m reminded of a video where a panhandler at traffic lights confronts the driver who uses the usual excuse ‘I’ve only got my card’, only to present them with a card reader instead. But cash still has a role to play.

For one thing, card technology is not infallible. It relies on a number of moving parts including a great uplink (interesting in a field when the 4G network is full to bursting with people instagramming), an absence of soft and hardware glitches and also the cooperation of the card user’s technology – chips get bent in back pockets and phone wallets run out of battery. Let’s not get started on the ‘strike a pose’ you have to do in line to use Apple Pay with Face ID. On a more serious note, cybercrime becomes a significant threat when there is no alternative for the exchange of goods and services.

A solidly cashless society also risks disenfranchising large groups of people. It may be a cliché to say that the elderly are less tech-enabled – the number of so-called silver surfers is definitely rising at speed. But, it is still true that they are the group most dependent on cash and with bank branches and ATMs disappearing at an alarming rate, they’re running out of places to find and spend it.

The simple fact is that if you brutally block off an avenue that consumers have been used to using since the beginning of time, you create inconvenience, not remove it. Look at parallels with retailers who insisted customers could only engage via email, chatbot or social media. Not including a contact-centre call number drives customers mad, even those usually happy to email or tweet. It’s not that they can’t use the other channels, but you’ve taken away the option. And sometimes, only that option will do.

There are more technologies emerging every day that will help the less connected members of society get with the cashless revolution. A number of fintechs are coming up with solutions like Monese, an app that allows foreign workers to create a native bank account more easily than standard banks, thus giving people access to the cards and contactless technology.

But the fact remains, cash has been the standard form of transacting for centuries in most nations while card use has only been commonplace for a handful of decades. Serving customers well means offering choice and customers tell us that while they recognise the growing cashless nature of most of their spending, cash still plays an important role in their purchasing behaviour. Turning off the cash tap is like cutting off your nose to spite your face. And then how will you get Face ID to work?

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