Future Forum | Bank of England

Do we need to do more to understand the cash user?

David Fagleman
David Fagleman | 2 months ago | in Money, Money, Money

The payments landscape is changing rapidly. There are more ways to pay then at any other time in human history resulting in people using cash less for day-to-day transactions. But apart from data that makes these points, do we really know why people are using cash and what drivers will change their behaviour in years to come? Who knows what the new payments tech will be in 2028!

I’d like to share the results of a study we (Cash Services) conducted last year (below). The insights are not limited to understanding how cash use will change; they also shed light on what drives payment behaviour. For example, for regular card users, contactless is popular as it requires little change in behaviour. This suggests that this group will comfortably and quickly adopt mobile pay and future innovations. But for heavier cash users, more card use is viewed as a real step change in behaviour and they will continue using cash unless wider shifts occur (e.g. cash is accepted in fewer places, such as transport systems and/or convenience stores). It’s a much greater ask for them to use the latest innovation in payments. 

By understanding the cash user in this way we can begin to think about the future of payments in a more realistic manner. It enables us to paint a picture of the payments landscape of tomorrow that reflects real behaviour and includes all social grades, rather than one dictated by a vision of a digital-only future.

Through a series of interviews with regular card and regular cash users in urban, suburban and rural areas we hoped to paint a better picture of how and why people pay for things the way they do. In the weeks leading up to their interviews participants were asked to keep a diary noting how they paid for items and how it made them feel. For the second week, the card users were asked to use cash and the cash users asked to use card. Both groups hated using their non-preferred methods for a week but the exercise ensured that when it came to the interviews they had really thought about how and why they pay the way they do.

From the interviews, four distinct typologies emerged in terms of cash attitudes and cash behaviour:

The Cash Reliant - This group is likely to get paid in cash, spend cash and see no need to use a debit/credit card as anything but a back-up. They lack confidence using other methods of managing their money e.g. online banking.  (Note: the unbanked (1.5 million people without a bank account) were not included in this sample). 

The Cash Budgeter – This group tend to withdraw the same amount of cash each week to cover their day-to-day expenses and to keep track of their spending. They are likely to have limited disposable incomes and may have current or past financial difficulties. They typically use cards for larger expenses (£50+) and online purchases. 

The Cash Carrier – Likely to use a mixture of payment methods, this group will always have some cash on them. They use card for the majority of their purchases and online banking for budgeting. When they do use cash it’s for lower priced items as to pay for these by card is felt to be embarrassing. 

The Cash Avoider – This group use card whenever they can and tend to avoid carrying or withdrawing cash. Typically either a younger and more tech savvy group or older and security conscious, they only use cash if they have to and see it as a less secure option. In contrast to Cash Carriers, they find it harder to keep track of their spending when using cash. 


Sabrina Rochemont 2 months ago

Thank you for categories that avoid creating silos of generate judgements...
Do you classify the cash saver with the "cash reliant" category? It does fit in with the financial exclusion issue to some extent: people who do not know their rights to a basic bank account, may also be those with unreliable incomes who cannot meet the monthly minimum thresholds (in developing countries, often associated with farming). They may not be able to open a bank account as a result, and miss out on savings products.
Do you have broad headings you can share on the drivers for the "cash reliant" category?

Ramblingsofabard 2 months ago

I think it would be good to know the reasons why people are in the particular categories. The categories provide a great framework to look at different users (or avoiders ) of cash, thanks for sharing!

Sabrina Rochemont 2 months ago

It can be sooo tempting to assume on demographics, eg that the aged are cash reliant, and younger cash avoiders. Here are my November notes from Thailand:

Consumers have a positive attitude towards a cashless society, apart from younger Thais (18-21) who “do not have the purchasing power of the older generation and are less aware of the mobile payment methods.”

Cash still dominates payments, ahead of QR codes, and P2P transfers.

"Thailand is accelerating its journey towards a cashless society and mobile payments are becoming a pivotal part of this journey with QR code being the best performer in mobile payment as 75% of respondents have used this type of payment," said Mr Pakee Charoenchanaporn, Director of Consumer Insights, The Nielsen Company (Thailand) Ltd

“We believe that with the collective steps taken by the key stakeholders and industry players, we can expedite the process of going cashless to less than 12 years. UnionPay believes that our push to enable QR Code for payments will also play an important role in enabling a more inclusive cashless society, as this form of payment allows consumers and merchants to adopt it easily without the need for costly devices or infrastructure.”

Shelley (BoE Moderator) 2 months ago

Thank you for sharing David! Very thought provoking!

David Fagleman 2 months ago

Thanks Shelley

Helen Morrissey 2 months ago

I fall firmly into the cash carrier section.Happy to go online to pay bills but when it comes to day to day I much prefer cash. I just find that if I have to hand cash over for something then I will think about it before making the purchase - if I just use cards it is easy to lose track of spending and I worry that I will spend far more than I need to. I don't think I could ever be converted to going fully cashless.

june gibson 2 months ago

I agree Helen Morrissey. I am an OAP and it matters that I see how the cash is going.

june gibson 2 months ago

PS When old people like me shuffle off the mortal coil I suppose it won't matter!
I see that cashless is more profitable for the banks, and utilities who nag re on line payments.
If there is a global power cut what will everyone do then?

View all replies (2)

Amy Buckingham 1 month ago

This idea has been advanced to the current phase

Ranjit (BoE Moderator) 1 month ago

Interesting article. Whilst I fall somewhere in the middle of the categories, my recent experience did not leave me with much choice in how I carried out a transaction. I travelled back from the US via Newark airport but could not purchase food or drink from the departure terminal with cash so I had to use my credit card which, adding on transaction fees, cost me more. I hope this is not a sign of the way forward ....