When Will Cash Be Obsolete in the UK?

The financial landscape in the UK is undergoing a significant transformation, marked by a noticeable shift away from traditional physical currency. Digital payment methods are increasingly prevalent, leading to widespread discussions about the eventual obsolescence of cash.

Current Role of Cash in the UK

Cash, comprising physical notes and coins, maintains a presence in the UK economy, despite its declining transactional volume. In 2023, cash payments accounted for 12% of all payments made in the UK, a reduction from 14% in 2022. While this marks a decrease, cash still stands as the second most frequently utilized payment method, following debit cards. Debit cards, in contrast, were used for half of all payments in the UK in 2022, increasing to 51% in 2023.

The total number of cash payments in the UK fell to 6.0 billion in 2023, down from 6.4 billion in 2022. However, the British Retail Consortium reported a rise in cash usage for retail transactions for the second consecutive year in 2022 and 2023, reaching 19.9% of transactions. This suggests that cash continues to serve specific purposes, such as budgeting during periods of high inflation. The Bank of England notes that a substantial amount of banknotes remains in circulation, held in wallets, shop tills, and ATMs.

Driving Forces Behind Declining Cash Use

The decline in physical cash usage in the UK is largely propelled by the widespread adoption of digital payment technologies and shifts in consumer behavior. Contactless payments have become particularly dominant, with 94.6% of eligible in-store card transactions in 2024 made using this technology, up from 93.4% in 2023. British consumers averaged 236 contactless transactions per person in 2024, reflecting the convenience and speed of this method.

Mobile contactless payments, such as Apple Pay and Google Pay, are also experiencing significant growth. In 2023, one-third of UK adults used mobile contactless payments at least once a month, with 42% of the adult population registered for such services. The total number of card payments in the UK surpassed £1 trillion in 2024, with UK-issued debit and credit cards used for 31.4 billion transactions, a 4% increase from 2023.

Technological advancements, including improved payment infrastructure and the growth of online banking, have further facilitated this shift. Faster Payments, enabling near-instant money transfers, became the third most used payment type in the UK in 2023. Mobile banking applications, allowing users to check balances and make payments, also contribute to reduced reliance on cash. The COVID-19 pandemic accelerated this trend, as many consumers opted for cashless transactions for health reasons.

Reasons for Cash’s Continued Relevance

Despite the accelerating shift towards digital payments, cash retains importance in the UK for various reasons, serving different segments of the population and providing unique benefits. A notable factor is its continued use by specific vulnerable populations, including the elderly, unbanked individuals, and those with limited digital literacy or disabilities. For these groups, cash often represents the most accessible and inclusive payment method, as they may face challenges with digital interfaces or lack access to banking services.

Privacy is another reason for cash’s relevance. Unlike digital transactions, cash payments do not create a digital footprint, offering anonymity. This appeals to individuals concerned about data collection, targeted advertising, or potential breaches of personal financial information. Concerns over data usage in digital payments were reported by 25% of UK consumers.

Cash also provides financial resilience, acting as a reliable backup during technological outages, power failures, or other emergencies. It serves as a practical budgeting tool for many, particularly during economic uncertainties like the cost of living crisis. Some retailers prefer cash to avoid increasing card transaction fees, which amounted to £1.64 billion in 2023. The UK government, through the Financial Services and Markets Act 2023, has also taken steps to protect access to cash.

Evaluating the Likelihood of Cash Obsolescence

Cash obsolescence in the UK could signify a near-complete reduction to niche use or a shift in its primary function. While some predictions have suggested the UK could become “virtually cashless” by 2035, with cash transactions falling below 10% of all payments, a full disappearance is widely considered unlikely in the near future. The Bank of England believes cash remains relevant to daily life.

Despite the ongoing decline in transactional use, the resilience and unique attributes of physical currency ensure its continued presence. The government’s legislative efforts, such as the Financial Services and Markets Act 2023, aim to ensure continued access to cash withdrawal and deposit services, preserving its infrastructure.

The recent uptick in cash usage for budgeting purposes, driven by cost-of-living pressures, demonstrates its adaptability and enduring utility for consumers. While digital payment methods will undoubtedly continue to expand and dominate transactional volumes, cash is likely to persist as an option for specific segments of the population and for its inherent benefits like privacy and resilience. The future of cash in the UK appears to be one of evolving co-existence with digital alternatives, rather than complete elimination.