Is Cash Dead? No! – The importance of maintaining cash in circulation.

Whilst the total amount of cash in circulation in the UK is greater now than it was 10 years ago, across the UK the percentage of transactions undertaken in cash has declined.[1] Digital payments have become more accessible; from 2009 – 2019 the volume of cash payments decreased from 58% of all payments to 23% and the Covid19 pandemic has exacerbated this trend, pushing many business and consumers into a cashless model.[2]

The lack of face-to-face transactions during the pandemic, as well as the internet and social media fuelled fears that notes and coins could spread the virus, have sparked concerns that the UK could move nearer to a cashless society far sooner than it was ready to do so. Many businesses have taken this opportunity to go cashless. According to the Bank of England, shops, including supermarkets have continued to encourage digital payments over cash ones, with 15% more businesses refusing to accept cash in July 2020.[3]

Despite this, during 2019, there were 2.1 million adults in the UK who mainly used cash for their day-to-day spending, representing 3.8% of adults.[4] Approximately 1.3 million adults do not have a bank account and rely solely on cash. For them, the cashless retail premises are effectively a bar to entry.[5] Indeed the latest ‘Access to Cash’ review warned that over 8 million adults would struggle to cope in a cashless society.

In the most challenging times the use of cash is often relied on more so than ever. Gareth Shaw, head of money at ‘Which?’ said: “Some of the most vulnerable, who rely on cash to pay for goods and services, are at risk of being excluded as the UK accelerates towards a cashless society before they are ready.”[6] The UK Government is also committed to safeguarding the use of cash, announcing that it will “legislate to protect access to cash and ensure that the UK’s cash infrastructure is sustainable in the long-term.”[7]

At Vaultex, whilst we have seen a marked decline in cash volumes since the start of 2020, we certainly don’t think cash is dead. Before 2020, the value of bank notes flowing in and out of our cash centres was broadly aligned, while at the start of the pandemic both dropped dramatically by around 50%. Once retail and hospitality, along with other sectors, began opening over the summer, the use of cash increased by 15%. One year on, as we ease out of another lockdown we are expecting a similar pattern although it’s not certain whether our volumes will return to their pre-covid levels. It will be interesting to see, as more consumers begin to start spending again in person, whether businesses reverse their ‘no cash policy.’

For many businesses, the fact remains that cash is perceived as expensive. The main cost drivers relate to security, storage, movement, banking with associated costs of people, hardware and software, insurance, funding, processing and cash in transit (CIT) services. Vaultex’s research shows that CIT accounted for over 70% of cash services spend amongst retail clients. One major high street retailer reported “businesses can save significant amounts of value in cash collection.” Indeed much of CIT service is too rigid and operates on an inefficient fixed schedule. We have been working with clients to reduce the time and costs associated with moving cash. Typically we have seen our customers’ annual CIT bill reduce by up to 20%. By moving cash more efficiently, not only will it reduce costs in this area, but will also have a beneficial impact on other costs such as insurance and security.

At Vaultex, we remain committed to ensuring everyone in the UK has a ready access to cash. By working with businesses to make cash as efficient as possible, we help to safeguard its use, especially for the most vulnerable who rely on it.


[1] https://www.bankofengland.co.uk/statistics/banknote

[2] https://www.ukfinance.org.uk/policy-and-guidance/reports-publications/uk-payment-markets-2020

[3] https://www.bankofengland.co.uk/quarterly-bulletin/2020/2020-q4/cash-in-the-time-of-covid

[4] UK Finance. UK Cash and Cash Machines 2020. p.13.

[5]https://publications.parliament.uk/pa/cm201719/cmselect/cmtreasy/1642/164205.htm#:~:text=The%20FCA%20has%20published%20research,not%20have%20a%20bank%20account.

[6] https://inews.co.uk/news/covid-19-forced-uk-cashless-society-payments-cards-809332

[7] https://www.globalgovernmentforum.com/uk-government-protect-cash/#:~:text=The%20UK%20government%20has%20set%20out%20proposals%20to%20protect%20access%20to%20cash.&text=The%20’Access%20to%20Cash%3A%20Call,in%20the%20long%2Dterm.%E2%80%9D