Banknotes bearing the likeness of King Charles III enter circulation across the UK today (5 June) as the country continues to go through a financial physical-to-digital transition.
Notes will be issued in the traditional denominations of £5, £10, £20 and £50, with King Charles replacing his predecessor and mother, Queen Elizabeth II, on the front of all notes.
Old notes featuring Elizabeth II will remain legal tender, and the Bank of England (BofE) states that consumers can expect a gradual introudcion of the notes, whilst it is also operating an exchange service.
The BofE, which issues banknotes for England and Wales, previously stated that there will be no other changes to the notes’ designs. This will mean Winston Churchill, Jane Austen, JMW Turner and Alan Turing will remain on the back of the four notes, in denominational order.
“We’re very pleased to be issuing the new King Charles banknotes,” said Bank of England Governor, Andrew Bailey. “This is a historic moment, as it’s the first time we’ve changed the sovereign on our notes. We know that cash is important for many people, and we are committed to providing banknotes for as long as the public demand them. Bringing these new notes into circulation is a demonstration of that commitment.”
Like many other countries, the UK has experienced a pivot away from the traditional use of cash to card-based and digital payments methods. Popular methods across the country include contactless cards and e-wallets like Google Pay and Apple Pay.
Meanwhile, more and more people are also using digital banking services via apps and websites as opposed to physical branches. This has in turn seen a decline in the high-street presence of some of the UK’s biggest banks.
However, in comments sent to Payment Expert, Pete Wickes, General Manager – Enterprise EMEA at Worldpay, stresses that the significance of cash payments in the British economy should not be understated.
“As King Charles III banknotes enter circulation today, pro-cashless society commentators may well see this as an opportunity to question the necessity of issuing new cash tender,” Wickes says.
“While the debate around its relevance plays out, our data reinforces its continued importance in society and to the British economy. In 2023, cash accounted for 10% of point-of-sale (POS) transaction values, equating to ~£120bn*.
“Despite cash usage forecast to change over the next three years, to 6% of POS transaction values, or ~£78bn**, it will remain a mainstay in the UK’s payments ecosystem.”
Issuing the new King Charles-adorned banknotes has been on the BofE’s tasklist since King Charles ascended to the throne back in 2022. However, printing physical cash is not the only job on the central bank’s agenda.
Monitoring and determining interest rates is one of its many roles, a task of heightened importance and public interest in the context of the UK’s economic situation. However, developing a Central Bank Digital Currency (CBDC), or ‘digital pound’, the antithesis of physical cash, has also been on the table.
This could be seen as evidence that cash is on its way out. On the other hand, some banking stakeholders have reported an increase in cash use of late. Back in January, Nationwide cited the costs-of-living crisis as driving an increase in cash withdrawal values, believing that consumers find it easier to budget with money in their hands.
Wickes continued: “While cash is used disproportionately by lower income consumers, those that are unbanked and underbanked, many turn to cash as a budgetary tool during periods of high inflation and the cost-of-living crisis too.
“As such, its importance and purpose is clear and will continue to be a key part of our diverse payments landscape, and not least, to expand the collections of banknote enthusiasts.”