My parents didn’t have bank accounts when I was growing up, they had no need of them. They were paid in cash, and they paid with cash. On the odd occasion that they needed to send anyone any money in the post, they went to the Post Office and bought a Postal Order.
Postal Orders appeared frequently in the schoolboy fiction I
read back then. Bunter and Jennings seemed to forever be in receipt of them,
and now and again, at birthdays or at Christmas, I might get one too. Usually,
they were uncrossed and could be cashed at the Post Office, although I remember
that once we received a crossed one, and had to endorse it and ask a relative
who had a bank account to pay it in for us.
When my Mum did finally open a bank account she kept a note book with all of her transactions listed, and every month she would check it against her statement. One time it differed; “It must be added up wrong,” I offered. In all seriousness, she asked, “Do banks do that often?” I had to gently point out that it was her arithmetic that was more likely in error.
Having a bank account and a debit card are pretty much
essential today, but even in 1976, when I started work at Midland Bank, an
account was more a privilege than a right; prospective account holders had to
supply references even then. Being issued with a Cheque Card, guaranteeing
payment of cheques up to £30, was by no means certain, and credit cards were
afforded to only the most respectable of customers. Cash remained very
important to most people for most purchases.
Today, it's different. Unimaginable as it might have seemed only a year or so ago,
it is now possible to go places and find signs saying things like, “Cash not
accepted,” or “Contactless payment only.” Perhaps the fear of COVID-19
transmission through banknotes was overstated, but the pandemic has been a
major factor in the shift towards card payments being accepted in more and more
places.
Contactless payment doesn’t only mean waving a debit or
credit card over a reader; we pay with our phones and even our wearables –
Apple and Samsung watches support it, as do some Fitbits – and around 9.6
billion transactions (1 in 4) were carried out contactlessly in the UK
in 2020. At the same time, we are using less cash: In 2019 there were 2,608.4
million Link ATM transactions; in 2020 that figure had fallen to 1,642.6
million. I am probably typical, and between March and September last year, I
barely used an ATM at all.
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| The value of ATM withdrawals has fallen dramatically since the pandemic started. |
Contactless payments have been around for longer than you might think, since 2007 in fact. Initially, only credit cards could be contactless but that was extended to debit cards in 2009. In September 2007, Barclays launched the ‘Barclaycard OnePulse’ the first UK card that combined Chip and PIN, contactless payment and Oyster functionality, allowing card holders to pay for goods, and pay their fares on the Transport for London network.
I recall seeing a Barclays contactless reader in a pub in Southwark around that time, and at first wondered what it was. I never saw anyone use one to pay for anything at that time, although commuters passing through Canary Wharf tube station were frequently seen using their Barclays Bank cards to operate the barriers. Unbelievably, it was in that same year -2007 - that PayPlus trialled the world's first NFC-enabled phone, the Nokia 6131 NFC, in New York.
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| The Nokia 6131 NFC, the first phone with contactless payments enabled |
Contactless payments and Chip and PIN are a far cry from the 1970s, when buying something in a shop with a Visa or Access card required a machine which used carbon paper to emboss the customer’s card details onto a form which they would then sign to authorise payment. Shops would pay the vouchers in at their bank, who would process them manually; no instant debits in those days.
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| An ancient Credit Card imprinter |
It is not so long ago that many retailers placed a minimum limit of £5 or £10 on card transactions because of bank charges, but now many small and unlikely outlets are not just happy to accept card payments, they positively encourage it. Shops like WH Smith sell contactless card readers for just £30. These connect via WiFi or mobile data, and although there’s a 1.65% transaction charge to the retailer, it’s still a cheap, convenient and safe method to collect electronic payments.
Contactless payments are booming, and it may be just as well that devices like the SumUp card reader have become available for people like market traders as our increasing preference in using cards and smartphones to make payments is going hand in hand with banks making cash transactions less attractive and less accessible.
Take my local branch of HSBC in Romford Market Place for
instance. When I worked there in the 1980s (it was Midland Bank at the time of
course) the counter was very busy. We had pubs, shops, and market traders
coming in all day long, paying in takings and changing notes for coins (see https://rulesfoolsandwisemen.blogspot.com/2014/06/a-midland-odyssey-part-two-shot-coin.html),
but that looks like it is becoming a thing of the past. I recently walked past
the branch and saw that it had been closed for refurbishment since
mid-September, and will only reopen in mid-November, and when it does it won’t
have any sort of counter service at all.
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| HSBC's Digital Service Branches have no counter service, a far cry from the days when the counter service was the focal point of almost every bank branch |
HSBC now have three different types of branches: Full
Service Branches, Digital Service Branches, and Cash Service Branches, and
Romford Market Place is set to reopen as a Digital Service Branch, which means
that when I eventually get round to bagging up all the loose change I’ve
accumulated but have not done anything with since before the pandemic started,
I’ll have to find another branch to take it off my hands. A minor inconvenience
to me, but a pain for local traders who bank with HSBC, I’d imagine. No doubt
other banks have similar non-cash handling branches.
The explosion in cashless payments, banks removing cash
handling, and it generally becoming harder for people to access and use cash
are grist to the mill for conspiracy theorists who believe that moving
consumers away from cash will enable corporations and governments to control
us. Imagine, the conspiracy theorists say, if every payment you make and every
product you buy are tracked by governments , along with your location, eroding
your privacy, and meaning that the state could control what you can buy and who
you can buy it from.
It’s pretty far-fetched to believe there is a conspiracy to
withdraw all cash and control us through the only payment systems available,
but there is a genuine concern that those who rely on cash and have little or
no access to digital payment methods could become increasingly marginalised in
a society that is gradually finding cash superfluous.
A logical extension to apps like Google Pay or Apple Pay would
be the ability for users to receive money through them as well as pay money
away. When that day comes, then cash will definitely no longer be king.
