Author: Dave Stevens, 14 March 2018

In yesterday’s Spring Statement, the Treasury announced it was looking at the future of one and two pence coins and, at the other end of the spectrum, £50 notes.  This is a result of the ever increasing perception that cash as a payment method is on the way out. Is this perception right? FSP research suggests that cash is still intrinsic to daily life.

Is cash still relevant?

It’s easy to see why the relevance of cash as a payment method is being questioned, especially with the uptake of contactless technology. Credit and debit card companies report the average value of card transactions continues to fall as more shoppers are ‘booping’ their cards rather than digging out the notes. However the pound in our pockets is far from dead. In 2016, the Bank of England’s Chief Cashier Victoria Cleland stated:  ‘2.7 million people in the UK rely almost entirely on cash transactions’. FSP’s own research conducted in December 2017 found that 99% of people surveyed still used cash and it was still the most frequently used method of payment. Whilst most commonly used in smaller denominations, cash is used by 10% of respondents for purchases over £50. It may be possible to wing a contactless night out, but is not yet a way to live our lives

Pound Coins - how some people shop

The value of cash

So what’s the value of cash? Well, FSP estimates that it accounts for 19% of the value of all retail sales – but with large regional variations; cities such as Manchester, Liverpool, Glasgow and Newcastle are a lot more dependent on cash than the plastic fantastic London and South East.  Social grade, too, is an important factor in the use of cash over payment methods such as credit cards.  78% of ABC1s owned a credit card compared to 57% of C2DE indicating a clear divide in access to funds and a continued reliance on the need to access cash for shoppers in the lower social grades.

Cash is here to stay

What does this mean? For one, cash is likely to be around and needed for a while yet, so retailers shouldn’t be doing away with the tills.  For a large section of the country and some of the largest UK retail centres cash remains a key method of payment. As ever, understanding your customer and their spending habits is key to the success of your assets and something that we at FSP are expert in and continue to research.

For more information and findings on FSP’s Payment Report please contact us 

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