A Cash Transaction: Contact and Connecting

Blog

Anushua Biswas, Risk Manager at the Bank of England (Prudential Regulation Authority)

The King was in the counting-house
Counting out his money,
The queen was in the parlour
Eating bread and honey.

Nothing delivers the kind of visual impact of wealth than cold hard cash. And yet, the future is here, and it is digital. It is all about bank transfers and PayPal. Speed and convenience are the modern banker’s motto. Statistics appear to confirm this: as early as 2017, card transactions surpassed cash as the most popular transactions. And Covid only accelerated this in 2020.

And yet, cash is persistent. It is the second most frequently used method of payment in the UK, and millions of people in the UK rely on it daily. When questioned, people believed they could budget better with cash. In a cost-of-living crisis, this was very helpful indeed.

I believe one reason for cash’s enduring popularity is its reassuring physical presence. One can touch it, count it, sleep on it. Its visual impact reaches far beyond nursery rhymes - who can forget the queues patiently snaking their way to withdraw savings from the Northern Rock in 2007? It was to signal the beginning of the credit crunch.

Cash is the very opposite of contactless. Paying with cash has similarity with bartering, which ironically, cash was invented to replace. Human beings are ultimately social creatures. We value speed and convenience, but we also treasure our connections. A cash transaction is seldom a straightforward payment for goods. Think of the conversations you have had with vendors, even if only expressing shock at the price or apology for not having the correct change. At souks and bazaars in Asia and North Africa, it is customary to haggle – stall owners are disappointed if they are not given the opportunity to show off their persuasion and negotiation skills!  It is a brief encounter and so much more than money changing hands.

While exchanging cash for goods and services, I have sought advice from my butcher on the best - no - the only way to cook his steak as I counted pounds from my purse. I have moaned about another grim summer with my milkman as he fumbled for change. I learnt about my window cleaner’s surprising ancestry - his father was a German POW, sent to work for North Yorkshire farmers. Today, monies due are transferred efficiently via a Bank transfer and we are like passing ships in the night. Fragile connections linking disparate parts of our community become lost. Even pay days are different. While salaries have been digitally transferred to bank accounts for a while, I remember the excitement of seeing someone from HR appear to hand out a bundle of pay slips. Each of these was sealed with perforated sides and we developed rituals for tearing them slowly and systematically to reveal our wealth. Sadly, the figures seldom boasted an extra zero, but these payslips always lifted the mood in the office. 

Of course, for many, cash is more than a way to connect with someone, but is a necessity. Small businesses value cash as card transactions incur fees. Those who are unbanked, such as homeless people, rely on cash to survive. And the time-honoured custom of honesty boxes for free range eggs, local honey and garden apples across the countryside would be lost without ready cash. Possibly, the best outcome is a hybrid one: cash and card. This way we keep our efficiency, but also get the pleasure of counting our cash and maintaining our human connections.