It is over fifty years since the concept of withdrawing cash from a hole in the wall, at any time of day, with a piece of plastic revolutionised our lives. Changes in Banking technology are now happening fast and often. With contactless card use on the rise, and mobile phone payments beginning to gain real traction, cash is quickly turning into a payment method of the past.
The effortless switch to using these new payment techniques has happened overnight, but what happens when you travel. Can the same methods be used abroad?
Despite the rise of these new methods of payment, cash was still essential to the UK economy last year. The number of banknotes in circulation saw a slight increase, although not on the scale recorded in previous years. The UK is not unique in the rise in demand for notes. Other parts of the world are telling the same story. Australia, Canada and the US are among them. Even some European countries have recorded an increase. However, the Scandinavian countries of Sweden and Norway have experienced a decline, which has prompted Sweden to move towards becoming a cashless society.
There are no completely cashless countries at the moment. However, the processes Sweden is now putting in place should make the country as cashless as possible by 2024. It’s not ruling out the use of cash altogether. Instead, they are encouraging other forms of payment by making a card or mobile payment simpler, faster and more convenient. A large number of retail outlets, restaurants and museums already decline cash, insisting on payment via card or mobile phone. As a result, nearly 70 per cent of the population now use a mobile banking App called Swish. Preordering Krona is no longer necessary, which is an excellent bonus for holidaymakers. However, unless you have the foresight to organise a prepaid currency card or preload your mobile with a banking App, you will be charged for using your standard debit or credit card.
Internet current accounts like Revolut and Starling offer very competitive exchange rates and no fees for using cards abroad. Prepaid currency cards let you load money and use in the same way as a credit or debit card. In a lot of cases, they offer better exchange rates and fees and give you the same level of chip-and-pin protection as your standard debit or credit card suppliers.
Cash only countries
It’s no surprise to learn that most of the countries we label as having a third world economy are a dependant on cash. Chad, Angola, Ethiopia and Burkina Faso are amongst these countries where cash is still king. The lack of strong banking network within these countries is behind the scarcity of ATM’s. And a poor telecom infrastructure is to blame for the lack of support for electronic payment systems.
Popular holiday destinations such as Mexico and India depend on the use of cash. Many Mexican households don’t have bank accounts, but the black economy in these countries is behind the lack of digital transactions which are easier to trace. Thankfully cards are mostly taken in top-rated hotels and higher class restaurants & bars. But if you want to sample the delicious street food or take home some genuine Mexican souvenirs, you will need to pay by cash.
Adventure seekers flock to India, so respected hotels & shops in the major cities will take credit cards as a method of payment. And ATM’s can be found. However, the queues can be lengthy, and they often run out of notes. So ordering currency in advance is still the ideal option, especially if you are willing to barter in the markets for the best deals.
Importance of cash in the economy
The Finance Trade Association predicts that only 9% of all payments in the UK will be made by cash by 2028. And it’s easy to dismiss the many benefits of using cash instead of cards or mobile phones. But cash can get you out of a lot of tricky situations, especially if you are in a hurry or in an area with limited telecoms coverage. It’s also a great budgeting or savings tool and helps children realise the actual value of the strange colourful pieces of paper we call notes, or those sticky, fluff covered metal things you find down the side of the couch. And many childhoods have benefited from bulging piggy banks, which have slowly swollen in anticipation of extra summer holiday treats. Although less significant than it was in the past, cash is still crucial to everyday life, so let’s hope it doesn’t disappear altogether.