The boss of the largest ATM network in the UK warns that cash may have only five years left. John Howells, chief executive at Link, says the infrastructure is undergoing a “death by a thousand cuts”. As he explains, “The cost of providing cash infrastructure, which includes the ATMs, security, and bulk cash centers is huge at £5bn a year”. Many of these costs are fixed and don’t change when people use digital payments instead of cash. According to Howells, “cash use is down by 40pc — and is still falling” since the beginning of the pandemic. Meanwhile, there are many people who not only use cash but depend on it.
Five to ten years “before cash becomes unworkable”
The banking trade body, UK Finance, recently estimated that by 2031, only one in every 20 transactions will involve cash. Howells sees this as a real possibility. “This infrastructure will start to fall apart unless something is done, and we are already seeing ATMs and branches closing at a worrying rate”. Howell’s network, Link, includes about 54,000 cash machines and works with most of the UK banks and card issuers. But Link reports that the number of free cash machines reduced by over a fifth over four years. In 2018, there were 52,358; today, there are 40,830.
While many people use digital payments regularly, about five million people in the UK depend on cash. This demographic includes people from rural areas and those with financial instability. Howells believes that these individuals are at risk of being left behind. Therefore, measures must be made to help them adapt to digital banking. “We have 5–10 years to fix digital payments before cash becomes unworkable, and we need to start planning how to get the new system working for all.” 
With the closure of ATMs, some UK banks began to offer basic cash services through different high street hubs. However, Natalie Ceeney, chairman of the Banking Hub Company, believes the demand requires a few more hundred hubs to stop the UK from “sleepwalking into a cashless society”.
The cost of living crisis
Although digital finance is widely-used, cash seems to be going nowhere. Personal cash withdrawals increased this past July in the UK, up almost 8% month-on-month and up over 20% year-on-year. Ceeney said this is a result of the current economy. With the rising cost of living, people struggle to keep up financially. “It’s absolutely because of the cost of living crisis,” said Ceeney. “People will be taking out cash and physically putting it into pots, saying ‘this is what I have for bills, this is what I have for food, and this is what’s left“. Additionally, paying with cards can easily lead to overspending.
Martin Kearsley, banking director at the Post Office, says the numbers show that the UK is “anything but a cashless society”. In July, a total of £3.32bn in cash was deposited and withdrawn at the Post Office, £100m more than those in June. The Post Office believes the increase in withdrawals comes as people use cash to help the budget. As Kearsley said, “We’re seeing more and more people increasingly reliant on cash as the tried and tested way to manage a budget. Whether that’s for a staycation in the UK or if it’s to help prepare for financial pressures expected in the autumn, cash access in every community is critical.” 
During the pandemic, many people’s financial situations took a plunge. At the same time, many businesses were forced to switch to digital payments, and are unlikely to change back. So while many people depend on cash, digital payments have become more prominently used. The future of cash, if it’ll stay or become obsolete, is unknown, although many experts have differing predictions.
What comes next?
Economist Eswar Prasad holds that “the era of cash is drawing to an end and that of central bank digital currencies has begun”. Prasad is a senior professor of trade policy at Cornell University, a senior fellow at the Brookings Institution, and the former head of the International Monetary Fund’s China division. He predicts that a mix of stablecoins, cryptocurrency, central bank digital currencies, and other digital money systems will cause the “demise of cash.”
Although he’s certain of a cashless future, Prasad says it won’t necessarily be a perfect system. For instance, digital payments have the potential to worsen income and wealth equality. “The rich might be more capable than others of taking advantage of new investment opportunities and reaping more of the benefits,” Prasad says. “As the economically marginalized have limited digital access and lack financial literacy, some of the changes could harm as much as they could help those segments of the population”. Plus, physical cash has its own advantages. Aside from budgeting, transactions with cash are more private and confidential.
In any event, the future of cash and digital money should be carefully considered and developed, not wandered into unprepared. “The end of cash is on the horizon and the time has come for an extensive public debate on what takes its place,” Prasad says. “After all, it will affect not just money but also the economy, finance, and society.”
- “Cash has just five years left, warns ATM boss.” The Telegraph. Patrick Mulholland. August 28, 2022
- “Cost of living: People turning back to cash as prices rise.” BBC News. Noor Nanji & Angela Henshall. August 8, 2022
- “‘Future of Money’ economist says the end of cash is coming—here’s what could replace it.” CNBC. Taylor Locke. November 21, 2021