SMUG MONEY: Cash is for cakes and cleaners, why else do we need it?

Written by Rebecca O'Connor on 25th April 2017

SMUG MONEY is a weekly personal blog post from Becky, one of the Good With Money co-founders


Inherently suspicious and a little bit reactionary – it’s perhaps no surprise that people in the UK are wary of payment methods so new-fangled that they not only bypass cash – they don’t even involve cards.

South Korea is apparently pressing the accelerator on going completely cashless by handing out pre-paid cards instead of change when someone makes a cash purchase. The world is watching with interest – particularly, perhaps, us Brits, who are notoriously wedded to that most resolute national symbol: the British pound coin.

But rather than tradition, it’s actually fear of fraud and theft that is seriously hampering our own country’s switch to card or digital-only payments, according to research published yesterday. The survey found fraud was cited as the main reason (59%) for UK consumers being unwilling to use new payment methods, followed by data security incidents (49%) and the risk of theft (45%). It also showed that around a quarter (27%) of British consumers do not currently use new payments methods.

Why I’m an Apple Pay-er

Personally, I never seem to have cash on me and am often caught out when it comes to things like: paying for cakes at the school sale, paying the window cleaner or when someone’s card machine isn’t working.

Equally, if I do by some chance have cash and I try to use it out of context, in Itsu in central London, say, and I take out my purse and start counting out coins with which to pay for my It Box – I feel like a bumpkin. Because there, anything more long-winded than a quick contactless tap seems almost rude.

I’m a big fan of lightning-speed payments. Contactless wherever possible and Apple Pay when I remember. You’d be surprised at how many places take Apple Pay – even the local farm shop.

I’d love to get to the point where I don’t even need to take a wallet out with me – because all my cards – even my Waterstones loyalty card and my National Trust membership – are via apps on my phone instead of taking up a brick-sized space in my bag.

I’ve started this process with the Starbucks app – which I use to claim my weekly free coffee bonus from Vitality Health Insurance – the coffee is one of my activity rewards and you have to have the Starbucks app to claim it.

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You might think that’s smart technology gone mad – I find the idea utterly liberating (and it seems, there might even be sustainability benefits of less dependence on bits of card and paper, although I haven’t researched this yet and discarded smartphones are certainly NOT good for the environment).

Of course it makes the thought of losing or breaking your phone more heart-stopping. But assuming everything is accessible via fingerprint technology, the content of your apps should be fairly safe and you can easily add them to a replacement device. You would of course have to be ultra cautious about not storing any log in information in any easily accessible emails or phone notes.

So we hardly need cash in most circumstances these days, even if we still quite like it. It IS still handy to have some in your wallet, just in case (£20 should do it), for all those little things listed above. But other than having that emergency backstop, do we really need to clutch on to cash? In particular, is it really safer than newer, quicker, digital ways of paying?

Ben Regnard-Weinrabe, partner at Paul Hastings, the law firm behind the research, thinks that our fears of new payment methods from new providers is unfounded: “Traditional providers occasionally suffer well-publicised hacks which they are perhaps better placed to weather given their long-established reputations in financial services. New payments providers often don’t share this incumbent advantage and therefore security is inexorably linked to the success of their business, which is why they are likely to put significant financial investment into ensuring their payment systems are robust against the threat of fraud.

“The security challenges faced by new payments providers are often no different to those affecting traditional providers; however, the benefits of using new payment methods are clear and many consumers and retailers across the UK are making the most of their simplicity, safety and convenience.”

How do you prefer to pay? Are you a cash clinger or a Paym (mobile-to-mobile) pioneer?

For the uninitiated, here are some of the newest ways to pay using your phone:

In shops

Apple Pay – Pay using your debit or credit cards  – all of which can now be stored on your phone. You just hold your phone over the payment device and authorise the payment. You might need to enter your phone’s password first.

Android Pay – Like Apple Pay but for Android users.

Other people

Paym – 17 banks allow customers, including some business customers, to make and receive payments using only their mobile phone number and the mobile number of the person or business they are sending the money to or receiving it from. Pingit is Barclays own version of this.

People abroad

Apps from Revolut and Transferwise enable you to send money to and receive money from people abroad, quickly and easily. Revolut is a foreign payments card that automatically converts money from your bank account into the local currency at the current exchange rate with no further fees added (up to £5,000 of purchases with no added fees each month).