17m journeys across London every week are made without cash, as we increasingly move towards contactless payments. Is the UK going the same way as countries like Sweden, where cash is all but dying out? And what does this mean for vulnerable groups like the elderly?

By Mark Richards

Figures came out from Transport for London (TfL) this week, showing that half of all Tube and rail pay-as-you-go journeys across the capital are now made using contactless payments.

That is a 25% increase from two years ago, with the move to contactless also being mirrored on London’s buses and trams, where 45% of payments are contactless.

Launched on London’s buses in December 2012 and across Tube and rail services in September 2014, contactless payments now account for 17m journeys across the capital each week.

As Shashi Verma, chief technology officer at TfL, commented, “Contactless ticketing has made travelling around London and the South East by bus, Tube or rail quick, convenient and affordable.”

Affordable? Surely the price is the same however you pay? No: TfL’s contactless ticketing system automatically calculates the best value fare based on a passenger’s specific journey history and then charges them at the end of the day.

With the new Elizabeth Line due to open in December 2018 we can expect the proportion of contactless payments to increase further with some stations in London – unsurprisingly Canary Wharf is one of them – already seeing 60% of journeys made using contactless payments.

So is it goodbye to cash?

We have written previously about countries that are moving towards a cashless society – and no country better exemplifies this than Sweden, with many banks now simply not handling cash at all. Only a quarter of people living in Sweden say they use cash “at least once a week” and only 15% of retail transactions are in cash. When you consider the relatively low value of many retail transactions – “I’m just popping down to the shop for some milk, love” – that is a staggering figure.

But a cashless society does not suit everyone, especially vulnerable groups like the elderly.

“As long as there is the right to use cash in Sweden we think people should be able to use it,” said a spokesperson for the Swedish Pensions’ Organisation. “We are not against a cashless society: we simply want to stop it from going so fast.”

But with many shops in Sweden openly displaying ‘no cash’ signs, Sweden’s older people seem to be fighting a losing battle.

Will the same thing happen here?

If I am any guide then yes it will. Until recently I was a staunch advocate of cash. I thought cash was quick, convenient and reminded you just how much you were paying for something. But I finally caved in – largely thanks to my daughter’s ridicule – and put Apple Pay on my phone. Now I use it all the time – and I am increasingly irritated by demands for cash. Having never gone out without cash in my pocket, I am now quite happy to take my cards and my phone. Yes, cash is quick, but now I think it is inconvenient. Find a hole in the wall, a pocketful of small change. No thanks…

…And then there is our window cleaner. Once a month he cleans our windows and on a Friday night, he bangs on the door for his money. On a couple of occasions, we simply have not had any cash. Either we have had to go to the cash point or he has had to come back. What a waste of everyone’s time. How long before he comes round with a card reader? Better yet, how long before we pay him directly into the bank?

Clearly window cleaners – and many other tradesmen – have preferred being paid in cash for obvious reasons. But Chancellor Philip Hammond dropped a heavy hint in his Spring Statement that this state of affairs was not likely to continue. The Chancellor is ‘seeking views’ on encouraging business who want to use digital payments. And why wouldn’t he? Digital payments can be tracked and taxed and would represent a way to strike back at the black economy.

The generational shift

With pressure from the Government and even people as old as me forsaking cash, clearly, the traditional way of paying is in trouble. When I look at my children (24, 22 and 19) I see a generation who will simply live their life on their phone.

“Have you got your train tickets to go back to uni?” “Yep, they’re on my phone.” So is his cash and so is everything else. With millennials due to make up 75% of the workforce by the middle of the next decade, it is not just journeys around London that will be made without cash.

Factor in technology…

We wrote recently about blockchain and the way in which it will impact our lives. Blockchain in unquestionably going to pose a threat to retail banking. Factor in the decline of cash and bank branches come under a direct threat. I cannot think when I last went to my bank, but I distinctly remember thinking its sole purpose was to take cash from high street traders and give them assorted bags of change in return. As the use of cash dwindles and more and more banking transactions move online, those big branches on the high street will be obsolete.

…And those banks will not be handling cash. Back in Sweden, none of the bank branches around Stockholm’s Odenplan offers cash.

So where does that leave the elderly and the vulnerable?

It is a relevant question. Are we now moving towards a society divided between cash and contactless? And will those people paying cash be charged a higher price – as is already happening in Sweden? For older people who do not always feel comfortable using a card, who may not have a computer at home and who have not grown up with the technology, these will be very real problems. As governments race to ‘encourage’ the end of cash, they should be careful not to leave a vulnerable section of society behind.