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The death of the wallet - pros and cons of moving to a cashless society

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Have you noticed there are more card machines than ever before? The jingle of change and counting your £5 and £10 notes are quickly becoming a thing of the past as we move into a cashless society.

Our recent survey showed that one in three people think we will live completely without cash by 2026.

Before we move onto the pros and cons of a cashless society, one thing we feel needs to be highlighted is the disappearance of the beloved wallet. Slowly but surely fewer people are buying wallets and purses, globally in 2020 the purchasing of wallets and purses fell by 20% and 18% in the UK! However, many companies are now designing phone cases with card holder slots, so gifting ideas are not limited. 

The main drivers of cash-free payments we found are that contactless is convenient, it reduces the need to go out frequently, some retailers prefer to avoid handling cash and some are no longer accepting it. We’ve weighed up the pros and cons of this new way of receiving and spending money.

Pros of a cashless society

Lower crime rates

Carrying cash makes it easier for criminals to target their victims.

Once the cash is taken from your wallet it’s difficult to track down. A cashless society will make it harder for organised crime to run smoothly as they rely heavily on physical cash to succeed in criminal acts, such as money laundering. Living in a cashless society could also see an improvement against modern slavery, which relies heavily on cash and backhand payments.

Automatic paper trails

The ability to improve your finance management as everything is recorded.

Having a record of our finances is a great way to keep track of our spending and to see where we could potentially budget and save. I didn’t realise I was spending THAT much at the coffee shop!

Improvement of digital and tech literacy

One thing we can all agree on when it comes to technology is how convenient and fast it makes everything.

Making payments has never been quicker as you tap your card or phone on the card reader, and this means no more carrying around a wallet full of change, you’ll feel lighter than ever! Many apps also enable you to send funds globally without additional fees.

Cons of a cashless society

Financial privacy

Cash transactions are anonymous so what you earn and spend is your business.

Having all the information online can sometimes make individuals question whether their privacy is invaded. However, banks and organisations have controls in place to ensure your information is secure with this highly sensitive information.

Exclusion of socially marginalised groups

Going cashless has many benefits, with the use of technology and its convenience. However, many individuals struggle with fintech and not everyone is on a banking app.

Additionally, how many times have you been asked for change by a charity, and you no longer carry any with you? A way to avoid this is to set up a regular donation to a charity of your choice.

Higher risk of personal information being compromised

With a cashless society we can see a reduction in financial crime and tax evasion, however there is an increase in cyber-attacks and criminal activity online from fraudsters.

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*AER stands for Annual Equivalent Rate and illustrates what the interest rate would be if interest was paid and compounded on an annual basis.

Paragon Bank PLC is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England number 05390593. Registered office 51 Homer Road, Solihull, West Midlands B91 3QJ. Paragon Bank PLC is registered on the Financial Services Register under the firm reference number 604551