Will COVID-19 Be The Demise of Cash?

Today, we’re talking about cash. Is it going to go away completely? Is it unhygienic? Should retailers still allow cash payments, or is it okay to push consumers towards cards and digital-only? Today, our President Jean-Pierre Lacroix is talking to David Fagleman, Director at Enryo, a consultancy firm in the UK that helps support financial services in times of change.


Melinda: Hi, I’m Melinda, and you’re listening to Think Retail. Today, we’re talking about cash. Is it going to go away completely? Is it unhygienic? Should retailers still allow cash payments, or is it okay to push consumers towards cards and digital-only? Today, our President Jean-Pierre Lacroix is talking to David Fagleman, Director at Enryo, a consultancy firm in the UK that helps support financial services in times of change.

Jean-Pierre: I’m Jean-Pierre Lacroix. I’m pleased to have today David Fagleman, and he’s a Principal Director of Enryo. David, welcome.

David: Hello, thanks for having me.

Jean-Pierre: Tell me a little bit more about your company and the services you provide in the banking industry.

David: We are an independent consultancy designed to support the financial services industry as it navigates times of change. So, we offer support and guidance by providing agile and innovative solutions through three pillars, through research and education, through stakeholder and political engagement, and through risk and resilience planning. And we were founded in March this year, which was a very exciting and horrific month for lots of people, but at the beginning of March, it was very exciting for us because we launched Enryo. And I launched it with the co-founder, another David, David Hensley, and we’ve been working together since 2015 around cash and payments. So, we had a lot of experience around the future of cash and how things were changing in the UK. And we also had a lot of work around risk and resilience planning. We developed the first-ever incident playbook for the cash industry, if there was a big problem, how the industry would collaborate and work together to solve it. So, we thought we could set up our own business and offer some of these services to the industry directly.

Jean-Pierre: Well, it’s great. I mean, cash has always been a very controversial topic or misunderstood topic. There’s a lot of industries that believe cash is going to go away, there’s a lot of industries that, you know, with COVID, had concerns about cash, and I think you’ve conducted a study to help debunk some of these myths. Could you talk a little bit about this study?

David: Yeah, absolutely. So, David and I have been involved with cash for some time. So, as soon as the story started to come out around COVID-19 and what that means for cash, and cash is unhygienic. We thought, “Right. Well, we’re going to have to look into this because there’s going to be some very interesting nuggets of information that aren’t going to be captured unless someone looks at it.” One of the biggest challenges you’ve got when you’re looking at cash is that we just don’t know how many transactions are happening because it’s not digital. It’s all analog. So, we really depend on surveys and models to try and figure out what’s happening. So, we went out to consumers in the UK, we went to a consumer representative sample, and went out to 400 small businesses who accepted cash before COVID-19 to understand, from the consumer side, how they feel about cash and, from the business side, are they going to continue offering cash and accepting it because it’s one thing that people want to use it. They’ve got to be able to spend it as well.

And we ran this research in the middle of July, which was an important time for the UK because the shops just started to reopen, the lockdown measures have eased. So, people were getting back to some sort of normal behavior. Because when you’re looking at consumer payments, the biggest issue with COVID-19 was the suppression of normal behavior, so the suppression of normal spending behavior. Never before seen, people had no option, no need to spend anything. So, we went out in the middle of July. And I’ve just got a couple of highlights for you. There’s so much we got from this study. So, I’ve really painfully condensed it for you today. So, the first thing that we found was that people are using less cash. So, people who said they use cash every day, 10 percent of these that every day before COVID-19 now fell to 5 percent in the middle of July, and 33 percent said they used it more than once a week, that fell to 15 percent.

So, quite significant change, but we were expecting that because we thought, “Well, some people who are using cash once or twice a week, the lack of opportunity to use cash will mean that when things pick back up, they’re probably not going to return to cash.” And SMEs reflected that as well and told us that they felt that their cash payments were down 12 percent and that card and contactless payments are up 14 percent. And we’ve also got in the UK–I didn’t know what it’s like in other countries­–it might be the same. But at the moment, when you go into the majority of shops, there are signs up encouraging you to use cards and some places just flat out not accepting cash. So, we asked people about this and over half people…sorry, over half of the SMEs said that they’ve put up signs to encourage this, and three-fifths of the SMEs that encourage their customers to pay with cards instead of cash.

So, a big change in the retail environment on the high street. And the main reason why people at SMEs said that they’ve put up signs is because they feel that they need to protect their staff, and limiting the contact with customers and limiting their contact with cash, they think, will achieve that. The consumers, only 1 in 10, think that cash is unhygienic. And that’s a really interesting finding because one of the big payment stories at the beginning of the pandemic was that cash was unhygienic. There was a leak from the WHO, something happened, and it was all over the newspapers here, but David and I, we knew this wouldn’t last. We knew this is a typical cash story. It’s very emotive. And as things settled down, you know, this 10 percent that think cash is unhygienic, they probably thought cash was unhygienic before COVID-19, and that hasn’t had much to do with it. But more broadly, we also asked people about payments choice, and 80 percent of consumers said that they want to see a range of payment options when they go shopping, including cash.

And nearly half of them said that if the signs discouraging cash use, encouraging card use were removed, they’d use cash a bit more, and a quarter said that they wouldn’t shop somewhere that didn’t accept cash. Whether they’d actually follow through with that or not, I’m not too sure, but they said it when we asked them. And that’s an interesting one because it shows that not everyone will change their shopping behavior if some place doesn’t accept cash, but they expect that place to offer it. SMEs, very similar response, 77 percent said that they think it’s important that they offer cash, as well as a range of payment options. And 60 percent said it was essential for their customers that they offered cash, while 70 percent said they thought that it was bad for business if they didn’t accept a customer’s method of payment.

What all this is really telling us is that there was a very complex payments landscape before COVID-19. You had some people using cash, some people using cards, some people using mobile, some people using their watch, some people using all of them at the same time, well, maybe not at the same time, but throughout the same day. That’s the same now. That’s the same as we, kind of, start to come through the other end of COVID-19, but it’s changed. Some of the changes accelerated, some has been exactly the same.

Jean-Pierre: Well, it’s very interesting because, you know, there’s been a trend towards mobile wallets globally. And, you know, it was interesting, I participated in speaking in the UK last year, and Barclays were doing a presentation on the growth of printing of cash or money, currency. And it was startling at how much new currency is being printed every year. And so, it’s a bit of a myth or that, you know, that the use of cash and the growth of currency is going away. And so, your study clearly validates that. And where would our audience be able to download that study?

David: So, the best thing to do is to actually find me on LinkedIn, David Fagleman, F-A-G-L-E-M-A-N, or our company page, Enryo, because we have different packs that we’ve got available on that. And we’re also launching some video explainers in the next coming week.

Jean-Pierre: Okay. Great. Great. And we’ll make sure that in our podcast, we do a link to the study. Has COVID influenced the role that cash plays in banking and commerce? And we talked about commerce, SMEs, but what about banking?

David: Yeah, absolutely. So, COVID-19 has accelerated this move towards digital, and our study showed that about a quarter or so, they realized they could get by without cash, but nearly a fifth said they hadn’t changed their behavior. And this is the dilemma that many countries are facing at the moment. It’s what level of cash infrastructure is necessary to ensure that the people who use cash can continue to do so. So, while COVID-19 could make it seem that this could be at a lower level than previously thought, we did caution that because there’s this core group, perhaps it’s a fifth, roundabout that, that is just not moving away from cash anytime soon. It’s going to take more than a pandemic for them to change their behavior. What are their…you know, what are the reasons why they still use cash? Well, we’ve got very high levels of digital exclusion in the UK. Some people don’t have access to the internet, some people don’t have access to a device, and if they do have those things, they’re not comfortable managing their finances. So, yeah, it certainly…COVID-19 has accelerated the change, but some of the entrenched issues still remain.

Jean-Pierre: Great. Are there other trends or factors that are influencing the role and usage of cash?

David: Yeah, absolutely. Well, you know, there’s more ways to pay than any other time in human history. So, technology played a huge role in the decline of cash. We went…as a civilization, it’s a very succinct overview here. We go from barter and trade, to precious metals, to coins, onto paper money, and then we slowly move into, kind of, cards and plastic. And it’s only really been the last 20-ish years that we really had a glut of digital options. So, technology is playing a big role, in a similar way, online shopping’s playing a big role. You no longer have to physically go out and buy goods and services. That’s still growing and that’s going to continue to have an impact on the use of cash, and joined to that, you’ve got demographic change. I was speaking to someone who does a lot of research on payments recently, Adrian Buckle from UK Finance. And we were talking about what’s called the pain of paying. And this is a study that’s been done that shows that if you use cash to pay for something, because it’s physical and tangible, you feel more connected to it. So, you understand the value of it. And the argument has always been, that’s why cash is important because you can feel the cost of something. You can feel the value. And he was saying that some of his studies have shown that actually for younger generations, kind of, late teens, early 20’s, they’re so digital now that the tangible aspect of cash doesn’t mean anything to them. What they see are the digits lowering in their bank account, and that’s that pain.

So, we’ve got a demographic change that’s really affecting how people pay for things. And I think there’s also a huge role that tourism plays in the use of cash. Obviously, tourist industry is completely stalled, but once it picks up again, there are a lot of challenger banks and digital banks that are offering a very, very attractive exchange service, where you get real-time exchange rate all around the world. Now, you have to use your cards, but in countries where cards are quite widely accepted, I think they’re really starting to push out cash from the foreign exchange and tourism market. So, it’s a combination of lots of things, but those are just some of the main ones that, I think, you know, are continuing to play a role in affecting the use of cash.

Jean-Pierre: When you look at uses of cash, what are the five strategies banks should consider to proactively respond to the shifting role of the use of currency?

David: You know, I should say I don’t envy anyone involved in the cash supply chain at the moment because it’s a very difficult challenge, but I think there’s a couple of things that I’d say that they should consider. The first is maintaining the access and deposit points, maintaining a branch and ATM network. If the customer still demands it, then you should make sure that it’s still there. How you could ensure that happens is perhaps make an investment. Invest in more advanced access or deposit points, some that can offer 24/7 access, or some that can offer local cash recycling, or some sort of automation. And if they can’t maintain their own deposit and access network, they must be able to ensure that customers can still access it by working with partners or working with other organizations. In the UK, you can use the post office to access your banking services. So, a lot of banks who’ve removed their branch or their ATM from a certain area will send the customers to the post office.

Something else they can do to collaborate at the backend, at the wholesale end, to make sure the cost of processing cash is as low as it can be. And a lot of countries are starting to do this, or have already done this. If you lower the cost of processing cash, you can lower the cost of offering cash as a service, ensure that you can continue to offer it and your customers can continue to use it. And the other side of it is offering digital support to your customers. If you don’t think your customers are using your online services, your mobile banking app enough, you need to help them. You need to offer them digital education. Whose responsibility is it to make sure that our citizens were digitally capable? Some people say it’s the government, some people say it’s the private sector, and truth, it’s everybody. And we need to make sure that people don’t feel like they can’t access the digital world that’s, you know, certainly, the direction of travel. And finally, they could encourage its use. You know, if they want to be involved in the cash game, encourage its use, promote it, and get people using it.

Jean-Pierre: Well, you know, UK is quite…and I think Europe, in general, are quite unique in that the use of ATMs has been consolidated where you all share a similar service. Am I correct?

David: Yeah. So, you can access anyone’s ATM for free in the UK through the link network, but that’s coming under the microscope because it’s becoming quite expensive for the banks to run.

Jean-Pierre: Okay. Great insight. So, looking well into the future, what do you predict the role of cash will be?

David: Well, no country has gone cashless as of yet and I don’t think one ever will. I think there will always be some form of public money, whether that’s cash as we know it today or a central bank digital currency, or, you know, some…a new form of the gold standard, something like that, because without it, governments would lose complete control of the financial system. It will be very interesting to watch countries like Sweden, Norway that have very low levels of cash use today, how do they go from 10 percent, 8 percent cash transactions to 0 transactions? And as you mentioned earlier, how do they square that with very high values of cash in circulation? There’s a multitude of very difficult questions that need to be answered before any country can go completely cashless. But it’s possible. Say, if we look like 50 years into the future, say 2070, hopefully, everyone’s fit and healthy, we may be using several types of different digital money for our day-to-day transactions. I don’t know what that could look like, but it could very well be the case, but there will still be a cash-like instrument that we can use for day-to-day transactions, or more likely use the backup of funds to ensure it’s safe. And a lot of the central banks are looking into a central bank digital currency and trying to create some digital form of public money. And I think that will probably end up being the future of cash. And I don’t say that lightly because I’m a big believer in analog. I think digital-only works if there’s a backup, but I think cash, as it is now or how might it be in 2070, will be the backup for the digital system.

Jean-Pierre: Great. Those are great insights, David. David, thank you very much for taking the time for some of the insights and the results of your study. Again, if you’re listening to this podcast, please visit our website where you’ll find a link to download David’s report. Thank you very much. Thank you, David.

David: Thank you.

Melinda: The bottom line is that customers still want options, and for the time being, that does seem to include cash. David has some pretty compelling reasons for why you shouldn’t remove cash as a payment option, including digital exclusion, and your customers are less concerned about cash being dirty than you think. And those that do worry about hygiene are probably going to opt for another payment method anyways and that’s really the point. Customers want to be able to choose how they pay even during a pandemic. Thanks for listening, and we will link to David’s LinkedIn profile in our podcast description. Thanks for listening.


David Fagleman is the Director & Co-Founder of Enryo, an independent consultancy, designed to support the financial services industry as it navigates times of change.

Think Retail is a podcast where top designers, strategists, thought leaders and business people discuss what’s coming next. For more information, email