The cash floor: why I want you to use more cash

During lockdown I stood in a socially distanced supermarket queue in Kent, UK and counted three ATM withdrawals in under ten minutes. Staff were wiping the keypad between each one. People still wanted cash, and the supermarket was making the effort to let them use it.

I have spent two decades in the cash and currency industry, most recently as Head of Marketing at De La Rue Currency. I should declare an interest. I want people to use more cash, because it is good for me and good for the industry in which I work. We rarely say that openly. We should. I think using cash is good for you too, and this article sets out why.

Our usual message is managed decline. Cash will be around for years, we say, and people should keep the right to choose it. That accepts that cash will keep falling and argues only about how fast. In the UK, cash fell from 58% of payments in 2009 to 9% in 2024. UK Finance expects 4% by 2034 [1]. The Bank of England is less certain, and says cash use may stop falling [2].

What is the cash floor?

Cash infrastructure is mostly fixed cost. Cash centres, vans and ATMs cost much the same to run however many notes they handle. As volumes fall, the cost of each transaction rises. Banks and retailers reduce their cash services, and volumes fall further. Burkhard Balz of the Bundesbank described this downward spiral in a speech in May 2025. Cash is still around half of transactions in Germany, yet his scenarios see it falling to 30%, or even 15% [3].

Somewhere on that path is a cash floor: the volume of cash use below which a country’s cash network can no longer pay for itself. Below it, the network survives only on subsidy or mandate.

The Bank of England’s Victoria Cleland said in May 2026 that “it is difficult to know where the long-term floor might be” [2]. She meant the level at which demand settles. The floor I mean is the volume the network needs to survive. The question that matters is which one is higher. If demand settles below what the network needs, cash fails even though people still want it.

Share of transactions is the usual measure, but it is the wrong one for this. What matters is the absolute volume of notes moving through a country’s cash centres, set against what they cost to run. A 10% share in Germany and a 10% share in a small island economy are very different businesses. The floor will vary by country, depending on volumes, geography and how the network is organised.

Why the cash floor matters to everyone

When the power failed across Spain and Portugal on 28 April 2025, card terminals and ATMs stopped working. Businesses that stayed open could only take cash [4]. That only helps if people still carry notes and shops still accept them. A backup nobody uses is not a backup.

In the UK, 2.6 million people rely heavily on cash, and a quarter of adults could not go more than a week without cash [2]. They need the same network, and a network needs volume.

There is a cost argument too, and my industry makes it far too rarely. A 2026 Bundesbank study found cash was the cheapest way for German retailers to take payment, at €0.43 a transaction against about €0.60 for girocard, Germany’s debit card, and around €1.00 for a credit card [5]. Most retailers know what card payments cost them. Few customers do. Even the language favours cards. In online payments, anything that is not a card is called an “alternative payment method” [6]. Cards are the default against which everything else is measured.

Demand also responds when people have a reason. UK cash payments rose in 2022 for the first time in a decade, as households used cash to keep control of their budgets [7]. The rise did not last, but it showed the preference is not fixed.

What happens below the cash floor

Nigeria showed what happens when cash disappears faster than people can adapt. In late 2022 the Central Bank of Nigeria redesigned the naira and gave the public weeks to swap old notes. Money supply fell from ₦3.3 trillion in October 2022 to ₦982 billion in February 2023 [8]. In an economy that is about 65% informal, traders lost sales. Growth slowed from 3.5% to 2.3% in the first quarter of 2023 [9]. The Supreme Court ruled that the old notes remained legal tender [10]. Digital payments could not replace cash.

Nigeria’s shock was sudden and caused by policy. A slow slide through the floor would be quieter, but the end point is the same: people who need cash find they cannot get it or spend it.

What would keep cash above the floor

Three measures would help.

1. Acceptance rules. Norway strengthened the right to pay in cash in 2024 and can now fine businesses that refuse it [11]. Rules like that protect acceptance.
2. Shared wholesale infrastructure. It lowers the cost of every note handled, which lowers the floor itself. The Bank of England now has powers to help the UK cash centre network “evolve to a more efficient footprint” [2].
3. Clear cost comparisons. They give retailers a reason to welcome cash.

The first two slow the decline. Only the third can grow use.

There is one more step, and it costs very little. Central banks should estimate their own cash floor and publish it. The Bank of England, which now oversees the wholesale network, is well placed to go first. A number gives the debate something firm to argue about, and it tells policymakers how much time they have.

Much of the shift to digital is genuine preference, and I accept that. Some of it is the spiral: as places to get and spend cash disappear, people use it less, whether they want to or not. Nobody knows where the floor sits. Nigeria found out by falling through it. I have an interest in finding it first. So do you.

In a future Perspectives article I will explore the wider and longer-term consequences of hitting the cash floor. Sign up to receive it. If you work at a central bank or cash centre operator and are able to share data, I would like to hear from you.

Questions and answers

What is the cash floor?

The cash floor is the volume of cash use below which a country’s cash network can no longer pay for itself. Cash centres, vans and ATMs are mostly fixed costs, so as volumes fall the cost of each transaction rises. Below the floor, the network survives only on subsidy or mandate.

Is the cash floor the same as the level where cash demand settles?

No. The Bank of England has said it is hard to know where long-term demand for cash will settle [2]. The cash floor is the volume the network needs to survive. If demand settles below that volume, cash fails even though people still want to use it.

Why does the cash floor matter?

Cash is the backup when digital payments fail, as in the Spain and Portugal power cut of 28 April 2025 [4]. In the UK, 2.6 million people rely heavily on cash [2]. Cash is also the cheapest way for German retailers to take payment, at €0.43 a transaction [5].

What happens when cash falls below the floor?

People who need cash find they cannot get it or spend it. Nigeria showed the effect in 2022 and 2023, when a rushed note redesign cut money supply from ₦3.3 trillion to ₦982 billion and growth slowed from 3.5% to 2.3% [8][9].

How can central banks keep cash above the floor?

Acceptance rules and shared wholesale infrastructure slow the decline, and clear cost comparisons can grow cash use. Central banks should also estimate their own cash floor and publish it, so policymakers know how much time they have.

Sources

1. UK Finance, UK Payment Markets Summary 2025. Link
2. Victoria Cleland, Executive Director, Payments, Bank of England, fireside chat at the Currency Research Banknote Conference, 14 May 2026. Link
3. Burkhard Balz, Deutsche Bundesbank, “Central banks at a crossroads: dealing with a looming downward spiral”, The Currency Conference, Bangkok, 27 May 2025. Link
4. Payment Expert, “Spain and Portugal power outage highlights cash importance”, 29 April 2025. Link
5. Deutsche Bundesbank, The costs of payment methods in the retail sector (2026), summarised by CashEssentials. Link
6. IXOPAY, “Alternative payment methods”, glossary. Link
7. Press Association via LBC, “Number of cash payments rises for first time in a decade”, reporting UK Finance, 14 September 2023. Link
8. Ebele Monye, “Why Nigeria’s controversial naira redesign policy hasn’t met its objectives”, Carnegie Endowment for International Peace, 18 January 2024. Link
9. KPMG Nigeria, “Cash crunch and dysfunctional economic structure slows growth in Q1 2023”, Flashnotes issue 7, May 2023. Link
10. Semafor, “Nigeria’s court overrules president to preserve validity of old banknotes”, 3 March 2023. Link
11. Norges Bank, “The right to pay cash”. Link