On the 9th of September, the Bank of England released its new Fiver made from a durable and flexible polymer. It also plans to release a new £1 coin in 2017. But with the many inconveniences of notes and coins, and card payments on the rise among the younger generation, how long can we really expect this cash to last?
In our society, money is largely what dictates the opportunities available to a person. Money in itself has no intrinsic value – it’s pretty useless, but acts as a token which can be exchanged for useful things. Such a token is essential because without it we would need to rely on trading one item for another. The problem with this is there is no guarantee people will want or need what you have to offer. Money solves this problem; it is universally seen as valuable, so everybody will accept it.
Over time, money has become considerably smaller, easy to carry around in one’s pocket but it still has flaws. In times of hyperinflation, cash becomes completely impractical and difficult to use. During tough economic times in Germany and Zimbabwe, wheelbarrows full of notes were often needed for trivial purchases. Because the value of currency plummeted so much in Zimbabwe, new notes had to be continually reprinted to reflect this – eventually reaching millions for a note less than a US dollar. But more commonly, cash is just susceptible to damage, loss and dealing with it can be annoying.
The new five pound note follows suit from Canada and other counties also issuing plastic money. However, contactless payments on debit cards now eliminate the need for physical money altogether, without any added debt like the ones incurred on credit cards. Ditching cash altogether seems like a natural next step – one that may happen in the not so distant future.
Cash does have a few distinct advantages. Interestingly, people tend to be more frugal when they use cash, perhaps because when paying for something, you are physically giving it away. Whether spending recklessly is necessarily a disadvantage or not, it’s definitely a psychological curiosity that everyone should be aware of. Although cards are safer overall, many people like to know that they have money – the physical feel of it is something that can’t be matched. The culture of the society to which it belongs is also embedded into the currency – which often features historical figures and famous places. Coins and notes are quite beautiful to look at and with card taking over, this cultural side to money might be lost and money would simply be a number and nothing more.
Cash – and change in particular – is something I personally find infuriating. Items are often priced at £X.99, so change endlessly builds up making it virtually impossible to spend it all. Lloyd’s TSB predicted that because of this, the average UK household has £14.15 in change just lying around. Change is traditionally dealt with by sorting and counting it manually into tiny plastic bags by denomination, then paying it into the bank. Paying in exact change can sometimes be satisfying, but requires a lot of fumbling around like a fool. This kind of patience is not really possessed by our generation – and with many advances in technology, it needn’t be. We live in a world where necessary tasks can be done almost instantly, and we’re not happy about wasting time waiting around or doing things manually. Without cash, redundant money would no longer be a problem that needed sorting, with instant payments saving time and money everywhere.
A UK survey shows that card payments are rising dramatically in popularity whilst cash payments are falling. If the trends continue, the number of card payments is set to exceed the number of cash payments in the next few years. In the US, 80% of consumers use their debit card for some everyday purchases but that number rises to 100% for 18-24 year olds. These numbers show that times are changing.
For those readers into the Netflix series Narcos, you may know that having too much money can be a problem. The infamous Colombian cocaine smuggler Pablo Escobar made $60 million a day – he had so much cash, he had no idea what to do with it all. He gave wads of cash to the poor, perhaps out of compassion but maybe just to get rid of it. He eventually resorted to burying huge piles of cash at various locations around the country. Around 10% of the money he earned each year (amounting to $2.1 billion annually) was lost – eaten by rats, damaged by water or simply lost. In addition to this, his cartel paid around $2,500 a month on rubber bands just to keep notes together. This is perhaps the most extraordinary case of wasted, redundant cash ever that wouldn’t have happened if El Patron’s followers only took card payments.
Although criminals losing out on money might not seem like a bad thing, without cash these big-time drug bosses would probably find it harder to reach their fortunes in the first place. Illicit transactions nearly always take place by cash because its movement is much harder to track. In-fact, the director of Europol (an intergovernmental EU police force) Rob Wainwright said this presents “significant barriers to successful investigations and prosecution”.
With everyone paying by card, large and suspicious transactions would be more easy for law enforcement to spot and deal with more quickly. In the absence of physical money, so called dirty money could not accumulate in the economy so easily either.
There are certain off-hand payments that you might think are only possible by cash – paying buskers, tips and the homeless. However, even some of Stockholm’s homeless community now accept contactless payments for Sweden’s Big Issue equivalent.
All in all, the new Fiver is shinier, nicer and more reliable than the old one. But it is fair to question how long these new editions will actually be in circulation for. It isn’t unreasonable to predict that going cashless may be one of the last modifications made to our physical currency. Cash is definitely on the way out.