Bread, brass and beyond: how cashless and cash both find a home in today's world

Some of the most valuable lessons on monthly budgeting can be learnt from cash rather than on an app. Andrew Parsons for The National

How often do you use cash? Surveys indicate that the majority of us expect the UAE to be cashless by the end of the decade. Cash, they say, is no longer king. A simple personal audit of day-to-day spending could tell you that prediction seems firmly on track.

In my own world, regular cash transactions have now largely shrunk to a triptych of neighbourhood shops: the local bakery where customers queue to buy straight-out-of-the-oven flatbread with dirham coins, the always-busy laundry next door and the baqala a few metres further on from that, although it has a card reader and is happy to take digital payments.

Apart from that, any cash we have in the house is usually reserved for the “tipping economy”, principally for the delivery people who arrive on the doorstep. But again, their presence has usually been triggered by a digital payment. The transition to cash-free or cashless is happening quickly, and almost all at once, all over the world – induced, accelerated and cemented by the habits most were required to adopt during the Covid-19 pandemic.

Even the previous widespread practice of writing multiple post-dated cheques to cover future instalments of car loans or rent is in decline.

I’ve written before about my landlord’s preference to receive post-dated rent cheques and mine for sending him the money by bank transfer. I fully expect us to conduct a similar negotiation over this for some time to come, but most other regular payments in my monthly outgoings are cashless, of course, whether that is for streaming services, social club memberships or even school fees, with direct debit schemes replacing previous practices of cash or cheques.

In our ever more frictionless and digital lives, even paying for parking involves a requirement for data and an app, rather than scrambling for discarded loose change in your car’s cup holders, as one did in bygone years.

On a recent short trip to the UK, I didn’t use cash once, although given that a cluster of European nations, including the British Isles, are regarded as the most cash-free economies in the world, that’s no real surprise.

While some of us like to carry some small quantities of local currency when travelling to pay for taxis, tips, souvenirs and sundries, that may be out of long-held habit rather than genuine necessity.

So where does that leave cash?

Even those elements of the informal and formal economy that still trigger cash payments may soon be, or are already, switching to app-based services or phone-to-phone transfers. And, the UAE has previously been ranked high on those cashless league tables.

Beyond that, much of the debate about “digital payments or paper currency” could easily settle within the framework that audiophiles use to argue about the merits of listening to music through a physical medium as opposed to on a streaming platform, such as Spotify or Apple Music, or the pros and cons of books versus eReaders, or even printed newspapers versus catching up with news online.

But all of those are asymmetrical arguments of habit, taste and ritual.

The immediacy of digital should far outweigh legacy products, but people also have a nostalgic and emotional attachment to the past and, perhaps, an awareness that physical unwired objects are immutable when the worst digital crisis happens, such as during last month’s Crowdstrike-induced global outage.

I’d also argue that some of the most valuable and hardest lessons on monthly budgeting can be learnt from cash or envelope stuffing rather than on an app, although a third way would be to use a prepaid credit card, essentially a digital envelope in this example to pay for regular outgoings in particularly tough or budgetary-constrained months.

It would also be good to see data on the longer-term impact on charitable donations by the apparent shift away from cash, although previous World Bank data found, perhaps predictably, that young people made charitable contributions through digital means during Ramadan. This suggests that the convenience factor may help rather than hinder donations in future.

So, cash is no longer king? In some nations it no longer has a seat at the top table. In the UAE, there are also points to note on both ends of the debate. Recent Central Bank data points to slightly less currency being issued (0.4 per cent) in January this year and more currency being in circulation (Dh900 million) outside banks.

What that suggests is that we won’t be completely cashless for a while yet. The economy still has places where cash has utility, even if its usefulness ebbs and flows like the tide. It also hints that those clothes in your wardrobe may still have pockets with discarded cash in them, just like decades ago.