First Comeback for Cash in a Decade

Like much of the world, the UK has seen an evolution in how individuals and businesses make payments over the past couple of decades. However, the previous 12 months saw a notable change, as cash payments bucked the trend and experienced somewhat of a resurgence for the first time in a decade, according to the BBC.

While this trend may seem like a step backwards in the digital age, it offers some interesting insights into the role of physical currency in our society, particularly for SMEs.

Don’t Call it a Comeback

The rise in cash payments is largely attributed to consumers grappling with inflated prices and the cost of living crisis. Many individuals find it easier to manage their finances using tangible cash, a sentiment echoed by a significant portion of the UK population.

However, our survey shows that just 17% of the UK prefer paying in cash. Data compiled by trade association UK Finance suggested nearly 22 million people used cash once a month or not at all, with a comparatively small million using it as a first choice.

Head of Research Adrian Buckle said: "There is a wide variety of payment methods available in the UK, and each provides specific benefits to the people using them. During 2022, we saw increased use of contactless, online banking and mobile payments. Although cost-of-living challenges meant that some people preferred to use cash to help with their budgeting."

What it Means for SMEs

Small businesses, in particular, often need to adapt quickly to changing consumer preferences. The apparent fresh interest in cash suggests that some customers still favour this payment method. SMEs should be prepared to accommodate diverse payment options for a broader customer base.

Cash payments require different handling processes compared to their digital counterparts. Smart SMEs are ensuring they have the strategies in place to handle cash securely and efficiently, including practical tills, safe storage and well-trained staff.

While digital payments come with well-publicised fees and charges, handling cash also incurs collection, counting and security costs. This has led SMEs to evaluate the potentially unexpected costs of accommodating cash customers.

Another factor in the rise in digital payments is the rise of remote working. As fewer people commute regularly, businesses are considering how this trend may impact sales, especially those that rely on brick-and-mortar locations.

The shift in payment methods presents challenges and opportunities for SMEs in the UK. Adapting to changing preferences and behaviours will only become increasingly important. Cash may not be king, but it is a significant player, and businesses that can strike a balance between traditional and modern methods are well-placed to thrive.

Going Digital?

With fewer people paying in cash, now could be the right time to make cashless payments more accessible for your customers. At BusinessComparison, we can help you compare the payment methods your business needs to be successful, from card machines to business bank accounts.

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