The latest Prospect lands. The monthly magazine is carrying a major feature called “The end of money”.
The writer Stuart Jeffries reports on the coming “cashless dystopia” and what a world without physical money will look like.
Coincidentally, that very same day, results from Travelex, the currency exchanger, are posted, showing a thumping 24 per cent increase in full-year revenue, to £534.2 million ($673.2 million). Underlying earnings before interest, taxes, depreciation and amortisation or ebitda, were even more impressive, up 156 per cent on 2022, at £58.8 million. Next year, they are predicted to hit £65 million to £75 million.
They cannot both be right. Travelex’s trade is cash. Either the end of money is not nigh and the whole thing is exaggerated or the foreign exchange company is telling gross porkies.
There is no doubt, the use of cash is in decline. According to research published in September by UK Finance, a trade association, about 22 million Britons used cash only once a month or not at all in 2022.
Slightly under a million mainly used cash. Since 2017, payments made by debit cards (including via mobile phones and watches) have overtaken those made in physical cash. The volume of UK payments that do not involve cash rose from 45 per cent to 85 per cent in the decade to 2021.
Intrigued as to what is really going on, I arrange to meet Richard Wazacz, chief executive of Travelex. First, his nose does not lengthen as he speaks, a la Pinocchio. Second, he appears genuinely upbeat about Travelex’s prospects.
What is happening is that the world is divided. In the UK, as in many countries, domestic cash usage has declined and is declining. Although for the first time in a decade in the UK, cash payments rose – only by 7 per cent but still bucking the longer-term trend.
UK Finance cites anecdotal evidence that in a cost-of-living crisis and with inflation rising to reach double figures people were finding it easier to manage their money by paying in cash.
But when people travel abroad, they want cash. That is because while cash is declining in many countries it is by no means all. There, cash remains king.
“Electronic payments, cards, Apple Pay and so on, they’re not ubiquitous,” says Wazacz. “Other countries have much stronger cash-based economies than the UK and elsewhere.”
In my own case, on two overseas trips recently I used no cash at all, not once. I did not have any with me, never felt the need to take it out.
Wazacz listens and nods his recognition. “It depends on what sort of traveller you are. If you travel a lot, if you’re a seasoned traveller, you’re more relaxed about how you pay for things.
“But most people go abroad once or perhaps twice a year. They can find it scary. They’re nervous and not used to the foreign currency. They don’t know what currency they need or how much. They don’t know the rate. We give them the money or a prepaid card to help them. With that in their pocket, they feel reassured.”
In fact, despite its drop in popularity in places like Britain, overall, the amount of cash in circulation is increasing. According to the US Federal Reserve, in 2002 there were $500 billion worth of dollar bills in circulation; today, that total is nearing $2.5 trillion. It has doubled in the last 10 years and is set to double again by 2030.
Far from vanishing, the amount of cash in the world is increasing. That is because the rate at which people travel is growing more than the domestic usage is declining.
International travel is booming and the boom is far from over – rather it is just beginning. The pandemic dealt a blip but levels in many countries are back to pre-outbreak.
Not in all countries. Some crucial markets, such as Japan and China, are returning but slowly. In Japan, outbound traffic is a third of what it was before Covid-19 hit.
Likewise, in China, the numbers going abroad are returning but they are still short of their pre-outbreak highs. They are likely to recover and then go on again, to new peaks, as the population becomes wealthier and older, and more inclined to venture overseas on holiday.
There are still plenty of economies in the world that rely heavily on cash. They may lack the technology or the local population is resistant to change – they like sticking to cash because it affords security and anonymity. It leaves no trail.
Also, cash is easier to manage. “Typically, cards highlight how much I’ve spent when what I’d like to know is how much I’ve got left,” says Wazacz. “Younger people are using cash to budget with.”
The world, too, lacks a unified payments system and there is no sign of one developing. Countries will take some cards, not others, or they can be used only in hotels and at ATMs.
Even the folk from the most theoretically advanced cashless societies, the Nordic nations, use hard money when journeying abroad. Currency exchanges at Oslo Airport are hugely busy.
Norwegians, it seems, will pay for everything via electronic transfer or cards or phone or watch when at home, but when going to Bali, say, on holiday, they will want cash, they’re not confident cashless will work there.
Increasingly, people are travelling with a mix of cash and cards. Travelex has its own Money Card. The traveller puts money on the card, which operates like a normal plastic card. It is secure, same as the old travellers’ cheques, and it enables them to keep their travel expenditure separate from their normal budget.
“People like that, they don’t like mixing their travel money with their day-to-day spending,” says Wazacz. This summer, 15 per cent to 20 per cent of Travelex sales at Heathrow will be of Money Cards.
There’s no doubt cash is receding, but slowly, very slowly. Wazacz’s prediction? “It will be a long, long time before cash disappears.” He is smiling as he says it, as well he might.
