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Warning: access to cash under threat, review finds

Which? calls for a regulator to protect cash

Cash could disappear from British society in the coming years if the government fails to take action, a new report has warned.

The Access to Cash Review, an independent study commissioned by the body that runs the UK’s ATM network, today warned that cash payments could be under threat if left to the mercy of market forces – potentially leaving millions of people struggling.

Currently, cash is used to make three in 10 transactions, down from six in 10 a decade ago. But it could fall as low as one in 10 in the coming two decades.

At the same time, around 8 million adults wouldn’t cope in a cashless society, the review found.

Which? is campaigning to protect access to cash – here we explain what this review has uncovered, and what needs to be done to secure a future for cash.


Cash infrastructure ‘on brink of collapse’

The Access to Cash review was commissioned in July 2018 by Link, the body that oversees the UK’s cash machine network, amid concerns raised by Which? over whether the rapid decline of cash was leaving people behind.

It was led by Natalie Ceeney, the former head of the Financial Ombudsman Service.

Her Access to Cash review has warned the UK is at serious risk of its cash payment system falling apart. Currently, there is no single regulator that oversees the use of cash and the infrastructure to support cash payments.

This means your ability to pay with cash in shops or withdraw cash from ATMs and banks relies on commercial businesses, who may have no incentive to protect cash as it becomes less popular.

The review outlined three worrying trends that could result in cash becoming harder to use in the UK, and may leave some people with no way to transact.

1. Cash deserts

Over the past year, ATMs have been closing at the rate of 500 per month. Bank branches are also disappearing from high streets, with 3,300 more than the last four years.

For many people, this means withdrawing cash may require travelling to the next town.

Moreover, most cash machines are owned by a handful of operators. The review warns that a single failure of a cash machine operator could shut down thousands of ATMs overnight.


2. Cash infrastructure fails

The circulation of cash relies on specialist operators to buy and sell it, transport it and feed it through to retailers.

Each of these activities is carried out by a relatively small number of players, all of which are commercial businesses.

Demand for notes has fallen by 6% for each of the last two years, while decline for coins has been declining by 6% per year for the past 10 years, making cash less lucrative for these operators.

The review warned that if a single player left the market, the UK would struggle to keep cash circulating.

3. Shops stop taking cash

When paying by cash, you probably don’t think about how much it costs the shop to process your payment – unlike credit cards, where fees tend to be well-publicised.

But the review found that the cost of processing cash has been rising. A business which takes cash needs tills, a cash float, a process for counting, checking and banking cash, and ways to reduce the risk of theft.

As fewer people pay in cash, retailers may question the value of cash transactions, and may stop accepting it, the review warned.

Poorer and vulnerable consumers are likely to worst affected by an unregulated shift to a cashless society, but everyone is potentially vulnerable.

IT outages, like those that hit Visa and TSB last year, could bring down digital payment systems overnight, with most consumers relying on cash as an alternative.


‘I could lose my independence’

More than 130,000 people have supported our campaign to protect access to cash for those who heavily rely upon.

Watch Gem Turner’s story to see why cash is vital for her to live an independent life with a serious disability.

You can join our campaign for Freedom to Pay. Our Way by signing our petition.

Want to share your views on whether the UK is ready to go cashless? Head over to Which? Conversation to join the discussion.


What needs to be done?

Cash shouldn’t be left to market forces, the review concluded, warning that regulation is required to ensure that our cash infrastructure is maintained and people aren’t left behind in the shift towards digital transactions.

The report made a range of recommendations to protect cash, calling on regulators to:

  • guarantee access to cash.
  • ensure cash remains widely accepted.
  • create a more efficient, effective and resilient wholesale cash infrastructure.
  • make digital payments an option for everyone.
  • ensure joined-up oversight and regulation of cash.

Which? is also calling for a regulator to be appointed to oversee cash infrastructure and protect access for millions of people who rely on cash.

Gareth Shaw, head of money at Which?, said the consumer group has been warning of the risk of ‘drifting towards a society where millions of people who rely on cash face being cut off – so this review’s recognition that the system is on the brink of collapse should be an urgent wake-up call.’

He said: ‘Government, regulators and banks must now act on the review’s recommendation to guarantee cash access for nearly half the population who consider it a necessity – especially those in communities hit by a double whammy of bank branch and ATM closures.

‘With our vulnerable digital banking systems currently being hit by more than one IT failure every day, we believe the Government should go a step further and appoint a single regulator with a statutory duty to protect access to cash and build a sustainable cash infrastructure for the UK.’

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