Feature - The future of the Great British Pound
With a constant stream of new payment technologies reaching the marketplace, you'd be forgiven for questioning the role of physical cash in today's society. Now that we can pay for goods online, via contactless means or a host of other methods, will cash remain relevant in five, ten, even fifty years' time?
Where is the humble Great British Pound headed in the future?
Innovation in payment options
Plastic payment cards have been around for about fifty years, yet remain extremely popular with consumers and vendors alike. Cards enable people to withdraw large amounts or pay substantial bills without issue. They are the preferred option of many for their convenience and due to their reassurance of financial back-up; many reimburse funds that are stolen to offer peace of mind, especially when travelling.
Meanwhile, more recent innovations have allowed money to transfer almost without restriction. Paying online enables people to make big ticket purchases without having to carry cash on them and paying by card offers them protection against fraud. It can also provide extended warranties for purchased goods. It's rare these days to find any business that operates using cash or even cheque - most favour credit or debit money transfers.
What's also great about these innovations is that they perfectly complement today's shopping trends, namely that of online consumption. Whether taking place from the sofa on a laptop or from the train via a smart phone, increasing numbers are searching for goods online and making purchases. Research by Google reveals that almost a third of all searches that take place on mobile devices result in a sale.
The problem with this attitude, of course, is that many don't possess the actual cash for these items. All too easily, credit cards and electronic payment methods allow people to buy things that they cannot afford; encouraging many to overspend and get into debt. Psychologically speaking, cashless payment methods are perceived as 'unreal', so it is far too easy for account-holders to quickly blow their budget. It could be that having physical cash on hand makes financial management easier and reduces the risk of over-spending.
The constant need for cash
The plain fact remains that the world couldn't work without the constant flow of cash - and for good reason. Paying with notes and coins is reassuring, as they are the final resolution of a transaction. According to the Payments Council, three in five 'one-off' under-£25 transactions are paid in cash. It is also worth remembering that even in the 21st century, not every venue or vendor accepts card payments; contactless payment terminals are still few and far between, too. In fact, being without cash has the very real potential of leaving you in an awkward situation.
Generally speaking, cash is the safer option, too. Counterfeiting is very rare, yet many people have experienced some sort of card fraud or identity theft from previous online transactions. That in itself is a reason that some people shun cards and online banking, preferring to use cash (only 35 per cent of consumers use online banking, says The Payments Council). Additionally, cash is a payment method that is accessible to everyone, no matter their age or social demographic; alternate payment methods can exclude those with a poor credit history or who are young.
Of course, one of the biggest reasons that cash is still relevant is that the system can break. Several recent high-profile technical glitches have adversely affected electronic transfers, online banking and cash points; causing all manner of issues for account-holders. Technological innovation is all very well, but only provided there is a robust infrastructure to support it. No-one wants to risk being unable to access any money or pay suppliers.
What about the pound?
As for our beloved pound, what does the future hold? It's been a turbulent few years for the UK's national currency. It has been devalued due to ongoing quantitative easing and seen, according to thisismoney.com, as 'tainted by its proximity to and dependence on the Euro', which means its position as a safe haven for investors looking for a Euro alternative may have dropped.
That said, the pound remains one of the globe's strongest currencies, despite recent dips. After years of speculation that the UK might abandon sterling, the Euro-crisis has quietened any suggestion that Britain might adopt the Euro. The mere mention of this is enough to get most Britons riled, though - the pound is something that nationals are fiercely loyal about. Trying to change it would be a huge task and one that would no doubt face opposition at every turn. It looks as though the Great British Pound is safe for the moment.
The future of cash
With so much new technology emerging, some might be forgiven for thinking that cash could eventually become unnecessary. Technology is ever-growing while the banks have been down-sizing their operations; in the Eurozone, efma.com writes, the number of actual branches has halved since the Euro was adopted.
Yet despite all of this, says mobilepaymentstoday.com, cash still accounts for eight out of ten transactions and Euromonitor International found that $14.4 trillion-worth of consumer payments were made globally with cash, compared with $9.6 trillion via card. The Payments Council says that in 2008, 98 per cent of adults were 'cash users'; making nearly nine cash transactions per week.
That in turn makes cash extremely important for British businesses, with cash still the predominant 'received-payments' method. The average small business, latest stats reveal, receives around two-thirds of its payments in cash, a quarter via card and just six per cent through automated payments and Paypal.
Clearly, we're still a long way from being a 'cashless society'. This is chiefly because cash is a 'simple, human-friendly technology' that has survived for centuries and is available for all to use. It's safe to say that cash, specifically the pound, will remain relevant in years to come.
It isn't going anywhere!