Last week, we published an article about how America is increasingly becoming a cashless society. Those who generally rely on cash, such as waiters, Salvation Army donation collectors and taxi drivers are feeling the effects, and some businesses are eschewing cash transactions altogether.
While America is on course to be a land of plastic-only transactions, Great Britain is seeing an increase in cash use. An article published by the BBC yesterday cites a survey by the British Retail Consortium of 17,000 Britons. It found that cash use in the country rose 6 percent from 2006 to 2007, from being used in 54 percent of transactions to 60 percent.
The survey “showed a reluctance by people trying to control their finances and to spend money they did not have,” the surveying company said. Stephen Robertson, director general of the British Retail Consortium, told the BBC, “While total retail spending continues to grow, there is a widening gap between the amount spent in cash and the amount spent using cards, suggesting customers want to keep tight control of their finances.”
Robertson says credit card use may be hindered by high transaction fees the credit card companies charge merchants, which many merchants pass on to consumers. There are several other factors that may be playing into the rise in cash use, as well.
Think we’re the only ones undergoing a housing crisis? The U.K. is experiencing a similar situation, with falling home prices and mortgage problems, which may be one reason why consumers are decreasing reliance on credit cards.
Fraud may be yet another reason Brits are favoring cash. In fact, Letchworth, a town in England, nearly gave up credit card use completely after an outbreak of identity theft. The Guardian reported in September 2007 that the town of 33,000 “suffered a sustained attack from card cloning gangs.” Card readers at gas station on the main road in and out of town and several ATM machines had skimming devices on them, which allow thieves to steal credit card information. After being targeted by schemers, many Letchworth residents have decided to forgo plastic for cash, and get the cash from bank tellers rather than through ATM machines.
One more reason they are starting to ditch the credit cards? “As many as 15 million Britons are using credit cards and loans in the struggle to keep up appearances as they mistakenly consider themselves to be middle class,” an article from the Fair Investment Company says. The article cites a survey which found that “around a quarter of the UK population are so desperate to live up to the middle class ideal that they are mounting up debts of almost 13,000 per person.” As a result, to get a grip on debt, many people are switching to cash.
What do you think — will America see a similar backlash from housing crises, fraud and debt? Will we once again resort to cash use to free us from plastic temptation?