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14 May 2021

The future of cash: seven things we learned from the Which? Cash Summit

The Treasury revealed next steps for legislating to protect cash, banks announced a new action group and Which? launched our cash acceptance pledge

On Thursday 13 May, Which? held its second Cash Summit, bringing together key figures from across government, regulators and the payment industry to discuss the future of cash.

As well as our Chief Executive Anabel Hoult, speakers included John Glen MP, Economic Secretary to the Treasury; Matt Hammerstein, CEO of Barclays; and Sheldon Mills, Executive Director of Consumers and Competition at the Financial Conduct Authority (FCA).

Overarching themes included the need for legislation, innovation and collaboration. Here are seven things we learned from the session:

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1. The government is moving closer towards cash legislation

Our Freedom to Pay campaign scored a big win in March 2020, when Chancellor Rishi Sunak announced plans to introduce legislation to protect access to cash.

Just weeks later the first national lockdown was announced, and cash fell down the government's agenda.

At our Summit, Treasury minister John Glen MP underlined the government's commitment to legislation and revealed the next step of the process: a consultation on legislative proposals that will be launching in the summer.

The consultation will cover which organisations - such as banks, ATM providers and the Post Office - should be in scope of legislation, and who should have regulatory oversight. It is widely expected that this role will fall to the FCA, an outcome Which? has campaigned for.

2. Which?'s Cash Friendly Pledge received a warm welcome

This week also saw the launch of our Cash Friendly Pledge. This is a public commitment from businesses that they accept cash across their stores. Big names like Asda, Aldi and John Lewis have all already signed up.

The pledge is in response to our recent research which showed that a third of people in the UK had tried to pay for something in cash and been refused since the start of the pandemic.

Martin McTague, Policy and Advocacy Chairman for the Federation of Small Businesses, both said pledge was a great way for retailers to tell their customers 'we're with you and we want to help you.'

3. Banks are forming an action group

Two speakers, David Postings, CEO of UK Finance and Natalie Ceeney, author of the independent Access to Cash review, confirmed that they would be forming an 'Access to Cash Action Group' with eight major high street banks/banking groups.

Along with likes of Age UK and the Post Office, the banks (Barclays, Coventry Building Society, HSBC, Lloyds Banking Group, Nationwide, NatWest Group, Santander and TSB Bank) will develop industry proposals for how access to cash could be protected in the long term.

The group will build on the work of the Community Access to Cash Pilots, which are chaired by Ceeney. The pilots are testing a range of initiatives, like shared banking hubs in Post Offices and financial education services, in eight locations across the UK.

It's hoped that lessons from the pilots can help shape nationwide solutions for future cash access.

4. Innovation is helping to maintain cash access

Cashback without purchase is another important recent development. As of April, the government amended laws to make it possible for shops, cafes and pubs to offer cashback without you needing to make a purchase first.

Many of our speakers were optimistic about the role this could play in the future of the cash network, particularly in communities where access to banks and ATMs is poor.

However, questions remain about whether businesses will need to be incentivised to offer cashback services, as handling extra cash could be a security risk as well as bringing extra costs. The magic word - legislation - came up again, as the government could introduce financial incentives to ensure cashback is a viable solution.

5. The cash supply network will need to change

As the demand for cash falls, it becomes less cost-efficient. This is because of the costs associated with cash infrastructure, like the production, storage and transporting of cash.

This is likely to hit rural areas harder, as lower footfall means bank branches and ATMs are likely to stop being financially viable at a faster rate.

Nick Butt, Head of the Future Money Division at the Bank of England, said work to update the supply chain is ongoing and is another example of cross-industry collaboration.

Once again, it comes down to innovation and legislation. Organisations throughout the cash supply chain will have to find new and more cost-efficient ways to serve communities, while the government will also have to offer support to ensure no community is left behind.

6. Collaboration is key

One of the main takeaways from the event was how important it is for government, regulators, bodies and banks to all work together.

Working together provides more opportunities to innovate and find new solutions for customers - like the shared Post Office banking hubs in the cash access pilots.

However, legislation is important to improving collaboration. Banks have to be mindful of competition laws when working together, but by legislating, the government can set out a clear framework for where banks can and cannot join forces.

7. Time is of the essence

The final question of Summit was put to a panel of speakers: what can the government offer to support cash access?

'Go faster', said Martin Kearlsey, Banking Director at the Post Office.

'Pace', Natalie Ceeney agreed.

John Glen's announcement provides reassurance that legislation is coming. But this next step needs to be followed by great strides, as pandemic has accelerated the need to protect cash access, while slowing the process down.

Each session at the Summit was peppered with statistics: Research from the FCA shows that five million adults use cash for most of their purchases. Bank of England data shows that 1.2 million adults in the UK don't have bank accounts. Our own data shows that one in six people have struggled with the shift towards cashless as the result of the pandemic.

All slightly different ways of quantifying it, but the consensus is clear: if we don't act to protect access to cash, then millions of people will suffer.