Contactless spending is booming – so will the new polymer £5 have a short shelf life?
The Bank of England is updating the £5 note, today releasing 440 million new notes made of polymer material.
The new portrait of Winston Churchill gracing the note will remain unscathed, with the polymer protecting the note from spillages, crumpling and wear and tear.
"The use of polymer means it can better withstand being repeatedly folded into wallets or scrunched up inside pockets, and can also survive a spin in the washing machine," said Mark Carney, Bank of England Governor..
Although people are looking forward to the new innovative plastic cash, critics have pointed to the fact that England and Wales are behind the times when it comes to sturdy notes. Australia have had polymer notes in circulation for 20 years, while Scotland issued two million £5 polymer notes in March 2015 in celebration of the 125th anniversary of the Forth Bridge. In fact, more than 30 countries already use polymer notes.
Then there is the cost of introducing the new currency; the Bank of England spent £70 million to develop the new notes, which add up to around 7p per note. But when was the last time you got a fiver from a cash point? Only 7% of cash points dispense the £5 note – making the huge development costs a point of contention.
A key concern, however, could be the fact that we are heading into a contactless age, where cash is being supplanted by devices and apps. Consumers are embracing contactless, with research suggesting that adoption is only going to increase and push cash further into the shadows.
This year a massive £9.27 billion was spent on contactless methods between January and June. This figure, from the UK Cards Association, has already outstripped 2015’s figure of £7.75 billion – and there is still another six months of the year to go. This shows that contactless spending in 2016 is on track to be well over double that spent in 2015, with total spending via contactless already standing at a massive 18%.
This explosion in contactless spending is only to get bigger as household names continue to embrace technology to enable contactless spending – Barclays rolled out an app that allows £100 of contactless spending, TfL has taken its contactless payment system global and Uber never carries cash. Those are just three big names deploying tech for contactless spending, never mind mobile payment systems like Android Pay and Apple Pay.
Even MasterCard, a plastic stalwart of the wallet, has predicted that the UK could become a cashless society within 20 years. According to the payment giant, with contactless spending increasing 326% year-on-year consumers believe that cashless tech could replace physical money by 2036.
Research seems to point to a future without cash – meaning the new £5 note could have a short shelf life. However, the new noted has been designed with fraud in mind, incorporating a new generation of security features designed to make counterfeiting harder. A see-through window featuring the Queen’s portrait as well as a gold foil Big Ben are two measures designed to fight fraudulent notes – a big business with the NCA reporting 430,000 counterfeit notes in circulation during 2014. However, experts are vocal in their assertion that cashless is safer, with Doron Cohen, CEO of Covercy, saying:
“From a security point of view, banknotes are a nightmare due to being untraceable, with at least half in circulation being used for a range of illegal activities. UK businesses bear the brunt of this problem, with over 240,000 counterfeit notes being discovered last year alone.
"The financial powers-that-be should focus future initiatives instead on helping contactless to grow further, especially amongst businesses in the UK. Moving to a cashless society has immense benefits for British firms as such payments are fully traceable, secure and also decrease the risk of money laundering.”
The new £5 should be welcomed for its notable revamp in both style and security, yet questions need to be asked of the government about spending any more on plastic, when the future is seemingly one that is cashless.