Accounting Technician magazine’s cover story that cash is dying had a great deal to commend it. But the recession means all is not quite lost for the folding stuff, according to Ben Walker.
Some say reports of cash’s death have been greatly exaggerated. In the September/October edition of Accounting Technician, which came out this week, Colin Marrs presented a powerful case that the shiny stuff has lost its sparkle.
There is a lot to dislike about a trading tool that grows in volume as it reduces in value, and removes millions of pounds from circulation in bowels of sofas or forgotten penny jars.
Even the old benefits of cash are not as strong as they were. Electronic innovations such as Barclays Ping It mean even transactions between friends – to pay for lunch or square up for a day out – are now possible without reaching for your wallet. And yet some experts argue that cash has a future.
Not least among these voices is the man who makes the stuff, Adam Lawrence, chief executive of the Royal Mint. ‘I can’t see cash disappearing in my lifetime,’ he told the Cardiff Breakfast Club. Some £30bn will be removed from cash machines in the UK this year, he points out. ‘Cash is trustworthy and when you pay in cash it’s seldom refused and you know its value.’
But maybe there is more to it than the ring of authenticity. Tom Ironside, director of business and regulation for the British Retail Consortium (BRC), has evidence that people still find it easier to budget with cash than they do with electronic money. Indeed, in the world of retail cash has seen a small but significant renaissance.
According to BRC research, consumers paid with cash in 58% of retail sales last year. In 2010, that figure stood at 55 % 2010. The key, says Ironside, is the contracting economy. When money is short, cash’s presumed budgeting benefits come to the fore. ‘Customers have less money,’ Ironside told the Daily Mail. ‘They’re buying things only as and when they need them, shopping more often but spending less each time. And they’re more likely to be paying with cash.’
The bigger question is whether that’s just what economists call a dead cat bounce – things have a tendency to stage a brief, illusory recovery when doomed to die. Richard Braham, head of payments at the BRC, thinks not. ‘People are always trying to get rid of payment methods,’ he tells AAT Comment. ‘They tried to get rid of cheques, but people said we would like to keep them. As a consumer, I don’t want to get rid of all my cash and rely on something else.’
And back at the Mint, Lawrence stands strong. ‘We are going to see the eroding of cash and people will make choices,’ he told the Cardiff Breakfast Club. ‘[But] we are not going anywhere.’
Ben Walker is the former editor of Accounting Technician.