What is a cashless society?

Are we moving towards a cashless society? It’s a question that businesses across the UK are asking, especially when thinking about future-proofing against shifting trends. After all, it doesn’t matter how innovative your products and services are or how ground-breaking your marketing strategy, if your customers can’t conveniently pay you for them.

In this guide, we’ll look at the concept of cashless societies and what impact it might have on small businesses, including:

• What is a cashless society?
• What are the advantages and disadvantages of a cashless society?
• How are businesses moving towards a cashless society?

Here’s everything you need to know about a cashless society in the UK and what it might mean for your business.

What is a cashless society?

What does a ‘cashless society’ actually mean? As the name suggests, it’s the idea that society is moving towards a state where no one uses cash to pay for anything. Although this idea once sounded highly unlikely, a decade of technological and societal changes have accelerated what now seems all but inevitable.

This is mainly because the rise of payment methods, like contactless debit and credit cards, has made it so much easier to pay without cash. Transactions that used to involve swiping the card, printing out a receipt and signing it now just require a tap of a card, smartphone or watch via ApplePay and Google Pay. This is without even considering how much money is now spent online.

The acceleration of this shift can partly be attributed to the COVID-19 pandemic. The idea of handling cash fuelled public concerns about spreading infection through touch. As a result, many businesses discouraged customers from using cash while others started taking card payments for the first time. Even smaller businesses like ice cream vans, plumbers and market traders started moving away from taking cash, and many haven’t looked back.

What are the advantages and disadvantages of a cashless society?

The advantages of a cashless society are that businesses have less risk and inconvenience involved in getting their takings into their bank accounts. With a cashless business, owners and staff no longer have large amounts of physical money onsite, which can help mitigate physical misplacement and theft.

Modern payment technology also means that payments can be taken more swiftly and conveniently. Staff no longer need to juggle notes and coins to give exact change, speeding up the transaction process. Faster transactions increase efficiency, a key factor in helping both retail and restaurant businesses to give customers a more seamless, enjoyable experience.

When it comes to talking about the advantages and disadvantages of a cashless society, it’s clear that businesses have the potential to make more money quicker and with less risk attached. Now, let's look at the potential challenges a cashless society presents.

One of the biggest considerations is accessibility for less-tech savvy members of the population. Although this could be older generations, it also includes those who aren’t ready or willing to switch to newer ways of paying. This could be because of a lack of digital literacy (think opening and navigating an online bank account and mobile phone) or a lack of trust in digital technology.

Think about your target audience and their preferred payment type. Remember, offering card and contactless payment methods doesn’t mean you have to stop accepting cash, or that you have to make the transition to entirely cashless straight away.

The cashless society conundrum: What should business do?

The pandemic has certainly pushed us even closer to a cashless society. The UK Government’s Future of Payments reported that 47% of UK adults made payments via their mobile device in 2022, while cash has declined by 15% each year since 2017. With this in mind, it’s important to look at your business and customer base. Although taking card payments does require some investment, you’ll need to consider if, or how much, custom you’re losing because you don’t take card payments.

If you’re still not sure about going cashless right now and have a customer base that still likes to use cash, this is something you can monitor to see what the impacts of stopping taking cash might be.