MDC Forum – Cash in Uncertain Times

Four speakers focused on the future of cash at the recent Mint Directors Conference online forum. Two academics used their research to explain how, and why people pay as they do and then two speakers questioned future payments and how they might evolve.

Professor Darren Duxbury, Chair in Finance at the Newcastle University Business School in the UK, carried out research in 2021 for NatWest bank. Given a confusing and changing payment landscape, the goal was to understand what might happen to cash by understanding the public’s payment intentions. Research suggests a close correlation between payment intentions and payment behaviour. The study also explored the impact of exogenous shocks on payment behaviour.

The research looked at five hypotheses.

• If people in their minds allocate money held in their bank accounts to specific purposes, does this mean they are more likely to use cash?

• If people are more likely to regard money as indivisible, non-fungible, are they more likely to use cash?

• Does a higher sensitivity to feeling the pain of ‘loss’ when they spend cash mean that they are less likely to pay using cash?

• If people have a higher tendency towards following routines and habits automatically, does this carry over to continuing to pay in cash?

• Does a lower level of financial literacy mean people are more likely to pay with cash?