The promise of a cashless society was meant to be about the triumph of technology. It signalled an age in which we no longer needed the notes and coins – or even the cheques – that had been the backbone of the economy for several centuries. In their place, we would be able to make small payments for items such as cups of coffee or newspapers using an app on a smartphone. Larger transactions could be made using cards or direct transfer via internet banking.
There is, however a more worrying variant of the cashless society – one that was not planned by central bankers; one that is more the unforeseen consequence of technological change. This is quite simply that Britain is running out of cash. More than 97 percent of the currency in use in Britain today is electronic. Notes and coins account for the remaining three percent. And the banking system has evolved to fit that changing circumstance. According to a report from the Federation of Small Businesses – Locked Out: The Impact Of Bank Branch Closures On Small Businesses – branch closures and the deliberate shrinking of the ATM network is making Britain’s small businesses unviable:
“The rapid pace of bank branch closures across the UK presents some very real and tough challenges for small businesses. FSB members highly value the face-to-face interaction they receive in-branch, particularly when making complex financial transactions, with staff who often have a greater understanding of their business and the local economy. In addition, many of our members deal heavily in cash and cheques and need access to over-the-counter banking facilities on a regular basis.”
The shift away from cash hits rural businesses particularly hard. Gwyn Evans, chairman of FSB North Wales, said in the report:
“Unlike in urban areas, if a branch closes in rural Wales, the business owner may face a 20-mile or more round trip to bank cash. Also, when you run a business dealing in cash, you cannot pay in a bag of change over the internet or through a smartphone app – there are limitations to even the most advanced technologies. In addition, online banking is not always easily available in rural areas.”
These impacts may be a harbinger of things to come for small businesses in urban areas too, as branch closures continue apace. The problem is that no matter how good the technology, some business – and especially charities and social enterprises – have little choice but to deal in cash and cheques. More alarmingly, they show us that our vulnerability to any failure in the banking system is even greater in 2016 than it was in 2008 when the government was forced to bail out the banks in order to keep the cash machines switched on.