Money-saver: why savvy shoppers are returning to cash

The reason for this return to cash is simple: paying with coins and notes is the oldest money-saving trick in the book.

It’s the easiest way to track your spending and make sure you stick to your weekly or monthly budget. Handing over physical cash is also the surest way for consumers to realise just how much of a rip-off that £10 cocktail was; contactless payments may be more convenient for some, but flashing a card doesn’t focus the mind on how much you’re spending – and how long it took for you to earn that £10 – in quite the same way as literally handing over your hard-earned cash does.

This is why consumer experts are recommending a return to cash as the best way to survive once energy bills hit this autumn.

But while millions of Britons are keen to use cash as the cost of living crisis makes watching the pennies increasingly important, some businesses are making it harder and harder for people to live within their means. Many are refusing cash payments altogether, while others like Tesco, M&S and Wilko are tearing out manned tills and replacing them with card-only self-service checkouts.

The trend, which began during the pandemic but has accelerated this year, has been met with alarm by charities and consumer groups.

“Being able to use cash helps people on low-income budget more effectively,” said a spokesperson for Age UK.

“Many people with health conditions, disability and dexterity issues find paying with cash much easier than paying with a bank card or phone; it’s not as easy for someone with sight loss to use a card reader, or someone with bad arthritis in their hand to hit the right buttons on a smart phone.

“Being cut off from cash and banking services is tantamount to being excluded from society, and is a risk for many more of us than is often assumed.”

According to the charity, one in five older people either have no access to bank cards or heavily rely on cash. “It’s time for the government to recognise how important banknotes and coins are to all our lives and treat the cash system as the essential piece of infrastructure it is – just like utilities, post and broadband,” its spokesperson added.

But it’s not just the elderly who risk being excluded by cashless businesses. Cash is often the only form of payment for millions of children, asylum seekers, autistic people, homeless people, and people in coercive relationships. It is also the preferred form of payment for many from low socio-economic backgrounds, the self-employed and others in insecure financial situations, who rely on cash to budget in difficult economic times.

One Labour MP told MoneyMagpie that she is speaking to her colleagues about possible legislative support to protect cash use. Meanwhile, two Conservative MPs who have made contributions to the Financial Services and Markets Bill currently going through parliament, have also raised the possibility of greater legal protections for cash.

James Davies, for example, told us that he had “been persuaded that mandating the acceptance of cash could be appropriate in the case of larger businesses in particular”. He said that he plans to raise the matter privately with the minister in charge of the Financial Services and Markets Bill.

His colleague Paul Maynard said that while he was “not entirely closed to the idea of requiring cash to be accepted”, he was not convinced “this is the best way to support the most vulnerable”, pointing out that a similar scheme in New York to mandate cash backfired and speeded up its decline. He said the most important thing right now would be to reform the cash distribution network, including greater access to ATM machines and more automated deposit machines for businesses to enable them to continue accepting cash.

It’s a position largely echoed by the British Retail Consortium (BRC), which is calling on the government “to intervene to make cash acceptance affordable for retailers, given its importance in society”.

The BRC estimates that over two million people entirely dependent on cash in the UK. A further 10 to 12 million are believed to rely heavily on cash to budget.

Since the cost of living crisis began late last year, cash acceptance has become an increasingly hot-button issue for businesses and the public alike.

In late August, Starbucks faced a global boycott call after an image appeared on social media suggesting that the company was going cashless in October.

It wasn’t true; the photo showing an in-store notice about its plans to phase out cash was taken at one particular franchise, which had taken the decision unilaterally.

“Starbucks has no plans to go cashless across our UK stores and we want to shut down any inaccuracies or further speculation on this matter,” Starbucks spokeswoman Hannah Smithdale told MoneyMagpie. “In the UK, we operate alongside various licensee business partners, which means this may vary from store to store and the majority of stores continue to offer cash payments to customers.”

Interestingly, while some franchises like Starbucks, Pret A Manger, Domino’s, Pizza Hut and Papa John’s have allowed some, if not necessarily all or even most of their franchisees to go cashless recently, many others have ditched their card-only policies completely.

For instance, Caffe Nero, which rejected cash during the pandemic, is now once again accepting both cash and card in every store. Burger King, too, is in the process of returning cash to all its UK restaurants. The move brings the two companies back in line with the likes of McDonald’s, Costa Coffee and Pizza Express, which accept both cash and card across their entire UK networks.

A number of rail operators have also recently started accepting cash again, having previously introduced strict card-only policies during the pandemic.

In fact, only three of the 34 rail operators in England, Scotland and Wales discriminate against cash users in any way. And even the three that do – LNER, Grand Central and Grand Western – still accept cash for ticket sales but, weirdly, won’t let you buy a drink if you don’t own a bank card.

One rail operator, Southeastern, has shown itself to be incredibly astute to the downsides of a cashless society.

In April 2020, the company launched the Rail to Refuge scheme, which allows those in coercive relationships or those fleeing domestic violence to use its services without any kind of payment. It launched the initiative with Women’s Aid after one of Southeastern’s managers, Darren O’Brian, learned how domestic abusers track their spouse’s card payments – or, in some cases, deny them access to their accounts entirely – in order to maintain control over them and prevent them ever being able to flee.

In a cashless society, coercive partners or coercive governments would be able to track, and subsequently block, every payment you ever make. Such privacy concerns have been highlighted recently by a number of high-profile “de-banking” scandals, including PayPal’s closure of a number of journalists and campaigners’ account throughout September.

The actions by PayPal to remove banking rights from those it disagrees with politically led to the downsides of a cashless society being debated in parliament, with MPs and peers expressing concerns about banking rights.

PayPal’s actions could yet prove a catalyst for greater introspection by MPs and peers.

Legislation is already under way to expand the cashback scheme for retailers, and to protect free rural cash machines and banks.

Consumer rights groups like Which? are also working with retailers to protect cash as a form of payment.

So far a number of major retailers have signed up to Which?’s pledge to protect cash, including Asda, Aldi, Co-op, Waitrose, John Lewis and Lloyds Pharmacy.

Others like Sainsbury’s, Morrisons, Lidl, Boots, Zara and Next, which haven’t yet signed the pledge, told MoneyMagpie that they are committed to maintaining easy cash payments across all their stores.

Sadly some retailers like Tesco and M&S are making cash payments so inconvenient by removing the cash option at self-service checkouts, that those struggling this winter may have to shop elsewhere. But, it’ll be the retailers’ loss.

As the Post Office’s banking director, Martin Kearsley, noted of his company’s record-breaking July statistics: “Our latest figures clearly show that Britain is anything but a cashless society.”