Billions of UK cash went missing in 2018....

The British Retail Consortium (BRC) - a trade association which represents 80% of Big Box UK retailers – published some survey data on UK payments last week.

Basically, the BRC research estimated that card payments in the UK amounted to £296 Billion and cash payments only £77.7 Billion (1).

If you are an avid consumer of all the anti-cash PR that appears in the UK media almost every day, such figures may not surprise you.  After all, the PR messaging is telling us that the UK will surely become a cashless society in the very near future.

And yet ... there are some very interesting statistics that don’t seem to be a good fit with the BRC Payment Survey findings.

Firstly, let’s look at figures from UK Finance, a financial services trade association.

According to UK Finance, in 2018 £173 Billion in cash was withdrawn from British ATMs(2).

So around £100 Billion more cash was withdrawn from ATMs than the BRC survey estimated was spent in British shops.

And, of course, ATMs are not the only source of cash in the UK. Around 12% of all cash used in the UK is still withdrawn over the counter at bank branches, building societies and Post Offices (3). So about £24 Billion in 2018. 

Adding those two figures together gives a total of £197 Billion of cash in the hands/wallets of the UK public in 2018.

Yet, to reiterate, the BRC survey estimated that only £77.7 Billion was spent in shops in 2018.

That is why the police surely need to be called - £120 Billion of cash has seemingly gone missing in the UK in 2018!

However, before getting on the phone to the police, perhaps we need to look at some additional UK statistics from 2018.

In that year, accord to the UK Office for National Statistics, total household expenditure was £748 Billion (4) and (5).

Now around 35% of household expenditure is paid through Direct Debits, straight from bank accounts (6). The remaining 65% of household expenditure –  effectively all made by card or cash - amounted to about £500 Billion in 2018.

So let’s now go back to the BRC figures on card expenditure in 2018, namely £296 Billion. Then add the total value of cash withdrawn from ATMs and bank branches in 2018, which was £197 Billion. Hey presto, the total of cards + cash comes to £493 Billion in 2018, with 40% of that total being cash.

The total of card and cash payments is only £7 Billion lower than the non-direct debit household expenditure of £500 Billion, a difference no doubt accounted for by cheques, payment Apps and other currently marginal payment methods.

Apologies for the plethora of figures but, assuming you are keeping up with the arithmetic,    a perhaps surprising reality is emerging.

Use of cash in the UK is grossly underestimated by payment surveys such as the one carried out by the BRC.

This is not a criticism of the BRC. Carrying out such surveys must be a very complex and demanding exercise. However, the fact remains that the analysis in this article clearly demonstrates that it is likely that cash accounted for 40% by value of all non-Direct Debit household expenditure in 2018.

Since cash payments are on average lower value than card payments, that 40% by value figure indicates that numerically cash payments would have exceeded combined debit and credit card payments in 2018.

This is, of course, contrary to the PR messaging of anti-cash vested interests.

But the good news is we don’t have to call the Police to find all that missing cash!

Finally - for now – let’s turn again to some UK Finance figures, this time for cash withdrawn from ATMs, which show a decline from £194 Billion in 2016 to £173 Billion in 2018, which represents a fall of around 11% (7).

However, in the same period, the number of free-to-use ATMs in the UK reduced from 55,000 to 49,000, also a fall of 11% (8).

So the reality of the situation is that the remaining free-to-use ATMs are as busy as they have ever been - and with the average amount of cash dispensed per withdrawal increasing each year, they are actually dispensing more cash than ever per ATM.

What does all this tell us about the UK’s headlong rush towards becoming a “cashless society”?

IT SIMPLY ISN’T HAPPENING.

(1)   Payment Survey / British Retail Consortium (BRC), September 2019   
 https://brc.org.uk/news/2019/brc-calls-for-action-on-card-fees    

(2)   Link Scheme Holdings Limited management September 2019.

(3)   Link Scheme Holdings management September 2019.

(4)   Released by Office of National Statistics 24 January 2019   https://www.ons.gov.uk/peoplepopulationandcommunity/personalandhouseholdfinances/expenditure/bulletins/familyspendingintheuk/financialyearending2018

(5)   According to the Office of National Statistics, in 2017 there were 27.2 Million households in the UK. https://www.ons.gov.uk/peoplepopulationandcommunity/birthsdeathsandmarriages/families/bulletins/familiesandhouseholds/2017

(6)   Independent Newspaper coverage of Sky Mobile survey of Direct Debits

 https://www.google.co.uk/amp/s/www.independent.co.uk/news/business/news/direct-debit-british-waste-money-personal-finance-spending-uk-family-households-a8278121.html%3famp

(7)   Link Scheme Holdings management September 2019.

(8)   https://www.link.co.uk/about/statistics-and-trends/