How would a “cashless” society affect consumers?

As more consumers turn to digital payments rather than cash, banks are increasingly beginning to close branches and reducing the number of ATMs available. However, according to new research, this move could leave millions of people struggling.

The latest research suggests that, in particular, those who are on low incomes, as well as the over 55s, could “risk being left behind” by a digital banking system. It’s estimated that up to 8 million adults in the UK alone could struggle if the country were to become totally cashless.

The survey, which looked at the spending habits of 3,000 British consumers, found that 74% of people in the over 55 age group had never used a mobile banking app before. In the low income group, 57% hadn’t used one. Furthermore, 26% of people surveyed had never used online banking.

A growing number of banks are focusing their efforts on digital banking. But where does that leave those that rely on branches? The research shows that 10% of consumers visited a bank branch at least once a week. Meaning that some consumers could be “left behind in the digital revolution”.

On the other hand, the survey also indicated that many of the respondents that claimed they don’t currently use online banking or banking apps said they would be willing to use them, although most said they would need help getting started. Many said they would find in-branch sessions useful in helping them improve their digital knowledge.

A report published earlier this month pointed out the need for companies to make sure paying with cash continues to be an option for consumers. This is because cash is still used across various essential industries in the UK.

However, the decline in the profitability of the “cash infrastructure” means that it could be under threat. Therefore, consumer groups have warned that regulators need to take steps to ensure cash payments are protected – especially for consumers that rely on them regularly in their everyday lives.