Cashless Transactions

Jim Shannon Excerpts

Tuesday 22nd January 2019 Westminster Hall

[Matt Warman (Boston and Skegness) (Con)]

I beg to move,

That this House has considered cashless transactions.

It is a pleasure to serve under your chairmanship in a debate that is already better attended than I had suspected it might be, Mr Gray. It used to be said that cash is king, but in reality that is no longer the case. Politicians used to talk of the pound in your pocket, but today just three out of 10 transactions use cash, whether coins or notes; in 2008, it was six out of 10. The Access to Cash report sponsored by, but independent of, LINK, estimates that just one in 10 transactions will use cash by 2033. I do not intend to call for that to be slowed down, but rather to be sped up. Although 98% of adults in the UK have a debit card and the opportunity to use a cashless or digital transaction, some 46% of them still do not like the idea of a cashless economy, even though there is clear evidence that the vast majority of people would be better off in a cashless world.

The so-called poverty premium costs each of our constituents hundreds of pounds a year. Those hit hardest by using cash and sticking to the tried-and-tested methods are disabled people who live in medium-size market towns, where it is estimated to cost over £500 a year not to take advantage of the better tariffs and so forth available online. There is a huge premium on people who are not taking full advantage of the latest digital technology and contactless cards.

There are 2.2 million people who say that they rely day to day on cash. Only 2.5% of those in higher income groups say they do, compared with 15% of those earning under £10,000 a year. There is a clear sense that the greater number of people relying on cash in their everyday life would benefit most from not using it so much. That is why I am calling on the Minister to speed up the Government’s bid to increase the use of the cashless economy, which has not yet yielded the results that we might want to see.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for bringing this issue to Westminster Hall; I am very aware of it in my rural constituency. Does he agree that it is essential that we ensure the viability of cash transactions due to continuing cyber-security issues? This is especially true in the case of rural areas such as my constituency of Strangford, where people cannot rely on the availability of digital means at all times. In other words, cash is king in my constituency and it cannot be ignored.

[Matt Warman]

The hon. Gentleman is currently right, but we will all be better off if we hasten the transition, so that people do not have to rely on cash and all of our constituents can use more secure and efficient digital means, whether they live in rural areas such as my constituency and his, or in big cities.

[Matt Warman]

I completely agree. Much of this is about trust. It is true, as I said, that 46% of people do not trust a cashless society, whether that involves crypto-currencies—although I suspect most of those 46% are not wholly familiar with every detail of that—or simply contactless cards. Part of this is about regulation; much of it is about trust.

It is worth examining in a small amount of detail why people want to continue to use cash. About 20% say it makes them feel more in control, 16% say it helps them with budgeting, and 3% want to hide their guilty pleasures—perhaps we had best not dwell on those. Some 5% do not trust online transactions at all, and 3% just do not trust the banks. That is a real issue if this trend is to be mitigated for vulnerable groups where needed and if the broader society is to take advantage of cashless transactions.

Countries such as Sweden already have twice the level of cashless transactions as we have in the UK, and their authorities have taken conscious action to slow down the pace of cashless-ising, to ensure that vulnerable groups are not left behind. It is also reported that 4,000 people in Sweden have had chips inserted under their skin, so that they do not even have to use cards—I am not sure that I would go quite that far, although I know the Minister might want to consider it as a personal experiment.

We are at risk of ending up with two cultures: those who embrace a wholly digital way of living, and those who do not. There has been an 8.5% decline in the use of ATMs in London, but just a 2% decline in Northern Ireland and a 2.9% decline in my area of the east midlands. There are very different views on what is important for people and on the pace of change.

It is instructive to look at what people use cash for. Figures from the LINK report show that just 13% of people pay their rent in cash—disproportionately those on lower incomes. Some 85% said that they use cash to pay for taxis, which is a particularly instructive example. That is obviously a nationwide figure rather than a conversation about London taxis, on which we could perhaps spend many hours. Taxis are a particularly interesting example because the giving of cash to a driver makes them more vulnerable to theft and to being a target for crime. It also means that they are responsible for ensuring that they have change, so they have to carry a float even before they have taken any cash. It is of course true to say that it would be naive in today’s society to get into a cab outside London and expect the driver to take a card transaction. This is a complex landscape.

Some four out of five people say that they pay their gardener—if they have one—in cash. I am sure that neither the Minister nor I wish to cast aspersions on gardeners, but there is a suspicion that there are parts of the economy where cash is used to avoid the taxation that I know he is very eager to collect at every possible opportunity. There are a whole host of reasons to promote cashless transactions, whether it is ensuring that people are at less risk of the crime that goes with cash or that businesses are at less risk of the increasingly expensive costs of handling cash.

[Jim Shannon]

I am mindful that in my constituency of Strangford, where we have a fishing sector, there is a tradition of boat owners paying their crewmen in cash. There has been a reduction in the number of banks across the whole of the Ards peninsula. Seasonal workers are also paid in cash. I put forward to the hon. Gentleman that one size does not fit all and that there are exceptions. We need to be aware of that, as does the Minister.

[Matt Warman]

I agree. In a sense, I make the same point that I made before, which is that currently there are a large number of exceptions and it would actually be in the interests of the many seasonal, low-paid and often zero-hours contract workers in my constituency to be paid digitally, because they would be less at risk of crime and the businesses that they work for would have less of the handling costs associated with cash. We are already at the point where the declining ATM network that those people rely on is struggling to make a viable business case to those who use it with such diminishing enthusiasm.