Cashless Transactions

Debate between Darren Jones and Matt Warman

Tuesday 22nd January 2019 Westminster Hall

[Matt Warman]

The hon. Gentleman is currently right, but we will all be better off if we hasten the transition, so that people do not have to rely on cash and all of our constituents can use more secure and efficient digital means, whether they live in rural areas such as my constituency and his, or in big cities.

[Darren Jones (Bristol North West) (Lab)]

I declare my interest in this issue. Does the hon. Gentleman agree that the increasing amount of online fraudware—for example, one of my constituents was defrauded of £40,000 by telephone fraud using her online banking—and the use of crypto-assets for online cashless transactions means that we need more regulation from the Government, so that consumers can trust the system to enforce the rules? Do we not need to give police more powers to tackle those who use cashless transactions for criminal purposes?

[Matt Warman]

I completely agree. Much of this is about trust. It is true, as I said, that 46% of people do not trust a cashless society, whether that involves crypto-currencies—although I suspect most of those 46% are not wholly familiar with every detail of that—or simply contactless cards. Part of this is about regulation; much of it is about trust.

It is worth examining in a small amount of detail why people want to continue to use cash. About 20% say it makes them feel more in control, 16% say it helps them with budgeting, and 3% want to hide their guilty pleasures—perhaps we had best not dwell on those. Some 5% do not trust online transactions at all, and 3% just do not trust the banks. That is a real issue if this trend is to be mitigated for vulnerable groups where needed and if the broader society is to take advantage of cashless transactions.

Countries such as Sweden already have twice the level of cashless transactions as we have in the UK, and their authorities have taken conscious action to slow down the pace of cashless-ising, to ensure that vulnerable groups are not left behind. It is also reported that 4,000 people in Sweden have had chips inserted under their skin, so that they do not even have to use cards—I am not sure that I would go quite that far, although I know the Minister might want to consider it as a personal experiment.

We are at risk of ending up with two cultures: those who embrace a wholly digital way of living, and those who do not. There has been an 8.5% decline in the use of ATMs in London, but just a 2% decline in Northern Ireland and a 2.9% decline in my area of the east midlands. There are very different views on what is important for people and on the pace of change.

It is instructive to look at what people use cash for. Figures from the LINK report show that just 13% of people pay their rent in cash—disproportionately those on lower incomes. Some 85% said that they use cash to pay for taxis, which is a particularly instructive example. That is obviously a nationwide figure rather than a conversation about London taxis, on which we could perhaps spend many hours. Taxis are a particularly interesting example because the giving of cash to a driver makes them more vulnerable to theft and to being a target for crime. It also means that they are responsible for ensuring that they have change, so they have to carry a float even before they have taken any cash. It is of course true to say that it would be naive in today’s society to get into a cab outside London and expect the driver to take a card transaction. This is a complex landscape.

Some four out of five people say that they pay their gardener—if they have one—in cash. I am sure that neither the Minister nor I wish to cast aspersions on gardeners, but there is a suspicion that there are parts of the economy where cash is used to avoid the taxation that I know he is very eager to collect at every possible opportunity. There are a whole host of reasons to promote cashless transactions, whether it is ensuring that people are at less risk of the crime that goes with cash or that businesses are at less risk of the increasingly expensive costs of handling cash.

[Matt Warman]

I agree. In a sense, I make the same point that I made before, which is that currently there are a large number of exceptions and it would actually be in the interests of the many seasonal, low-paid and often zero-hours contract workers in my constituency to be paid digitally, because they would be less at risk of crime and the businesses that they work for would have less of the handling costs associated with cash. We are already at the point where the declining ATM network that those people rely on is struggling to make a viable business case to those who use it with such diminishing enthusiasm.

[Darren Jones]

The case study of First Bus in Bristol—I would not speak accurately on behalf of my constituents if I said it was a cheap network—demonstrates that the use of digital payments has allowed a reduction in the cost of tickets because cash is no longer handled on the bus network. Does the hon. Gentleman recognise that that must be a positive for consumers, whether or not they use cash?

[Matt Warman]

I agree. That is an example of where digital payments are in the interests of both the business and the consumer—not simply in terms of convenience, but, in the case the hon. Gentleman mentioned, in terms of the viability of the bus route. Companies such as Square have tried to encourage marketplaces to embrace digital technology in such a way that businesses that often operate at the very limit of viability are able to find new and innovative ways of changing their business models slightly. Of course, it is no good for a business to accept cards only when people wish to show up and pay in cash. The London bus network experienced some controversy when it moved to using a card-only payment mechanism, and I suspect that the hon. Gentleman may have experienced the same in his constituency.

As the hon. Member for Strangford said, it comes back to ensuring that a one-size-fits-all force is not exerted either by Government or by business, but that a number of things are done to encourage businesses to understand that there are huge advantages, and to encourage consumers to understand that there are very limited opportunities for fraud when it comes to contactless cards or, indeed, chip and pin. We should be careful not to stoke those sorts of fears unnecessarily.

There are costs associated with handling cash and there are associated costs for consumers—socioeconomic risks for those who are often most reliant on cash but would benefit most from digital payments, for example. We therefore need to ask the Minister for a number of things from the perspective of Government. The first would be to consider whether action should be taken to encourage shops and businesses to go cashless and whether there should be a safety net to ban them from becoming entirely cashless, as has happened in some states in America. I would argue that in most circumstances, a retailer of any kind is perfectly entitled to make that decision for itself. We should not sleepwalk into a cashless society, however; we should understand the risks and the benefits.

With that in mind, my single largest request to the Minister is not that we try to invent some system in which, as someone proposed, a business rates scheme encourages cashless-ising in town centres, to encourage businesses to become more viable and eliminate costs to which they might be sentimentally attached, but simply to build on the success that Britain has already shown both in FinTech and in technology more generally. That means putting the governmental shoulder to the wheel and recognising that ultimately, the cost of taking cash is already very close—if not over the line—to outweighing the benefits. We are certainly already at the point where many businesses looking at that in detail would think very hard about whether taking cash was in their interests at all. Clearly, the moment when far more businesses go over that line is fast approaching.

We need to do two things. The first is to consider much more carefully the impact that eliminating cash can have on vulnerable groups in certain circumstances. Then, we must say what we can do to help those groups to embrace a cashless economy with much greater enthusiasm. Some of that means reassuring people about their concerns on the risks of fraud, while another part means defining—as the hon. Member for Strangford mentioned—what can always be paid in cash, at least for a long time into the future.

Would the Minister consider setting out a roadmap for the future proportion of cash in the economy, to reassure us that it has been entirely considered and that its impact has been thought through? If I had my way, I would set a target for the elimination of cash from the economy, in much the same way that—in an ideal world—I would think carefully about when cheques might be eliminated entirely from the economy. I appreciate that setting any type of target in that regard is probably down to the market as much as it is to Government, but whether or not there is a target, the trajectory is ultimately very clear: there will be less and less cash in the economy and that will mean certain things for vulnerable groups. Our job as politicians is to provide some leadership and tell people and businesses that it is economically advantageous for there to be less cash in the economy, however sentimental some people might feel about where we are in today’s society.

I will leave that gentle request there, rather than demand anything more of the Minister, but I would say that the direction of travel is clear: cash was king, but it is now coming towards the end of its reign.