Why is cash disappearing? And are we headed for a cashless future?

September 10, 2021

Have you noticed that many retailers, restaurants and bars aren’t taking cash anymore? Safety concerns over the Covid-19 pandemic are hastening the decline of physical money. We discuss some of the reasons why cash is slowly dying out and whether we will eventually end up in a cashless society.

If you're a business looking to switch from cash to contactless payments, contact us at Pomelo Pay to find out how we can help your business.

What are the pros and cons of cash?

Cards are safer

Coronavirus has dramatically changed the way we use cash in brick and mortar stores. Last year Surveys by Which found that one in three people have been prevented from using cash as a form of payment. Government guidance has been to actively encourage cashless payments due to safety concerns.

Paying for cash involves standing close to each other, touching hands and touching the same notes and coins. There is little room to socially distance. When paying with a card, customers can pay on a terminal or mobile card reader far away from a shop employee.

Although there is a risk of transmission through cash, studies suggest that the risk is actually quite low. One of the ways people typically contract Covid-19 is by touching a surface where droplets from an infected person have fallen. Levels of the virus are typically very low on a banknote. Nevertheless, with card and contactless payments, the risk is minimal.

Cards are efficient

Paying with a card is a lot easier than with cash. Customers don’t have to spend time looking through their wallets for the right banknotes and coins. For most low-cost transactions, you don’t even have to type in your pin number.

Not only is this simpler for customers, it’s also better for businesses. Although it may just take an extra 10 or 20 seconds for customers to use cash, those seconds add up. When you take this cumulatively, it’s a huge inefficiency having customers waiting around to pay.

With cash, a business may only be able to process 100 transactions per hour. Whereas with digital currency, a business may be able to process 200 transactions per hour. The speed of processing a payment makes cards a lot more attractive for businesses.

According to Simon Verraest, “Businesses might find themselves facing a big hurdle to buy hardware or decide on a contract because it’s expensive or they are locked into a long term contract. Historically there was a big capital expense to get started in the first place.”

Now that Pomelo Pay and other fintech companies are reducing these obstacles, more and more companies will abandon cash for digital payments.

Cards encourage spending

Cards are much better for businesses because customers actually spend more on cards. There have been numerous studies on the subject and it has been shown that customers are a lot more frugal with their cash.

In one particular study, two groups were told to bid on some products. One test group was given cash, whilst another was given credit cards. The latter group were willing to spend as much as 100% more for goods when paying by card.

With contactless card payments, customers not only spend more, they can also make orders quicker. Businesses can accept orders faster which in turn speeds up operations.

Cards also increase spending by creating a better checkout experience. One of the reasons customers abandon their carts is because they can't find their preferred payment method.

Whether you choose to implement Apple Pay or Klarna, you will reduce friction and encourage spending.

All of these factors can substantially increase revenue, something that we’ve seen countless times at Pomelo Pay.

Cards reduce risk

There are a lot more risks for businesses that have significant numbers of banknotes on site. There is an opportunity for thieves to steal money. There is also the potential for unscrupulous employees to remove this cash from the premises.

Every day or week businesses need to take this cash to the bank which adds to risks. Businesses need to keep track of all this cash, making a note of where it came from and where it's going.

With electronic payments, thefts can be minimised. For customers with cards, they are at risk of skimming, phishing and having their card stolen. However, unlike with cash, they have some degree of protection from banks if they are ever targeted by criminals.

Will cash disappear forever?

Card usage has steadily increased whilst cash has gone the opposite way. It was around 2018 that debit card payments began to overtake cash payments. Forecasts predict that by 2025, less than one in seven transactions will be made using banknotes and coins.

Although cards have a number of advantages over cash, it will be hard for every single small business and customer to swap their cash for a card. There are a number of compelling reasons which suggest cash won’t disappear forever quite yet.

Cash is easily accessible

One particular benefit to cash is that businesses have immediate access to working capital. Businesses can deposit cash in their bank account and use that to pay for supplies all on the same day. With cards, businesses may have to wait 1 to 3 days to be able to spend that money.

Poor cash flow can be a huge challenge for businesses. If businesses don't have access to funds they can’t pay bills, employees and suppliers. It is a widespread problem, with one in seven businesses unable to pay employees because of cash flow issues.

Although this is a significant drawback to electronic payments. We predict technology to overcome this challenge. Open banking is enabling even faster payment processing which will make managing the back end of a business even quicker and simpler.

At Pomelo Pay we want to make digital payments completely accessible which is why open banking is fully integrated into our platform. Businesses only have to wait 24 hours at the very most for customer’s funds to clear.

Cash doesn’t have fees

Some businesses only accept cash because they do not want to pay any fees. The fees associated with cards are extremely low, but they can add up at the end of the month.

If a business takes £1000 in cash every month, what is the benefit to them taking £1000 in card payments every month, minus the transaction fees?

As mentioned, customers paying by card spend significantly more than cash customers. Adding card payments will increase revenue which will more than offset the costs of any fees.

As more businesses realise this, cash usage will decrease even further. Our fees are set at just 1.49% but these are more than offset by the increase in spending, as Tom found out when he introduced QR code payments into his restaurant business.

Cash is anonymous

Cash is also completely anonymous, which makes it the currency of choice for customers and businesses who prefer to stay under the radar. As a result, cash is strongly associated with the shadow economy and more nefarious activities.

In 2019 12 EU member states implemented restrictions on using cash to combat money laundering and criminal activity. In Greece, customers were unable to pay for anything over €500 with just cash. The effectiveness of these measures is unclear, but it highlights just how expendable cash is as a method of payment nowadays.

Cash is easy to use

Statistics say that there are around two million Britons who predominantly depend on the use of cash and bank branches. These include the elderly, the vulnerable and those living in rural communities. For those who are unable to use cards, cash withdrawals and cash transactions are the only viable option.

Covid-19 ensured everyone who could go digital did so, but for some customers going digital just isn’t possible. A significant section of society don't possess mobile phones nor have broadband internet making connectivity impossible.

For people who are unbanked, budgeting, or on a low income using an ATM cash machine is the quickest and easiest way to take out money from an account and spend it.


There has been a steady decline in cash but Covid-19 has accelerated this downward trend. Efficiency, safety and increased spending will all ensure that digital payments are the most popular method of payment.

Innovation in the banking sector is moving at a rapid pace and we will continue to see new and exciting ways to make paying for goods easier.

QR codes, payment links peer-to-peer payments and one-click payments are making non-cash digital payment systems effortless.

Many experts believe the future could see a sharp increase in bitcoin and cryptocurrency being used as a payment method. These payment methods don't even require any central banks or financial institutions.

Although it is unlikely that cash will die out completely, any time soon. One day soon, we may see the end of paper money in the banking system.

If you want to speed up your operations and encourage more spending in your shop, add contactless payments to your checkout. Contact us at Pomelo Pay to find out how we can help your business.