The pandemic has accelerated a wider move to digital payments, but vulnerable people are much more likely to use cash

Digital payment methods offer many advantages, but those who can’t take advantage of the approach are at risk of being left behind. Lower-income households and those without internet access are likely to be most affected. During the pandemic, cash use appears to have declined less in constituencies with higher levels of deprivation.

Digital payments are less often used where online connectivity is unreliable or when people rely on others to buy for them. Many retailers don’t accept cards.

There are fears for the future of the cash system

Lower consumer demand is reducing economic incentives for providing cash infrastructure. This has led to fears the cash system could collapse in the coming years.

The number of free-to-use (FTU) ATMs fell by 13 per cent between 2018 and 2019, while the number of pay-to-use (PTU) machines rose by 38 per cent. This trend seems to have been more pronounced in more deprived areas. Overall, one in four areas were further from free access to cash in 2020 than they were in 2018 – even if in most cases this has been less than 250m.

ATMs accounted for 90 per cent of all cash withdrawn in 2019. Cash is also available over the counter from banks, building societies and post offices, as well as via cashback. But each of these methods has benefits and disadvantages.

Another aspect of the issue is acceptance of cash by retailers. There is limited evidence about the number of businesses that will not take cash, but one in ten consumers report that merchants have refused cash payments since the coronavirus pandemic began.

Measures to protect access to cash

The 2019 Access to Cash Review highlighted the need for different government bodies and regulatory authorities to work together to protect access to cash. The Treasury has set up and chairs the Joint Authorities Cash Strategy (JACS) group, which leads the UK’s strategy. JACS includes the Payment Systems Regulator, the Financial Conduct Authority and the Bank of England.

In the 2020 Spring Budget, the Chancellor said the Government would legislate to protect access to cash. In April 2021, the Government accepted an amendment to the Financial Services Bill to allow consumers to withdraw cashback from more retailers without having to make a purchase.

In July 2021 the Treasury published a consultation document on access to cash. The proposals include granting the Treasury powers to require certain firms (like retail banks) to provide deposit and withdrawal facilities for customers within certain distances. The Financial Conduct Authority would be responsible for monitoring and enforcing these requirements. The consultation closes on 23 September 2021.


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