Protecting access to cash

NOTE: This briefing paper gives a detailed snapshot of the situation in 2021. It is no longer being updated. For later developments, see The future of local banking services and access to cash (CBP-9453).

Cash use is declining

The way that consumers in the UK pay for goods and services has changed in recent years. Many consumers are increasingly turning their backs on cash and are moving to digital payments. This trend appears to have been accelerated by the coronavirus pandemic.

But it’s still an essential payment method for many vulnerable people

People who can’t use digital methods are at risk of being left behind.

• Lower-income households and people who don’t have or can’t use the internet are much more likely to depend on cash.
• Cash use appears to have declined less in constituencies with higher deprivation during the pandemic.
• Some retailers don’t take payments by card, and intermittent connections can also limit digital payments.

There are fears for the future of the cash system

By 2017, debit cards had overtaken cash as the main means of making payments.

Lower demand for cash has in turn reduced the financial incentives for providing cash infrastructure, notably automated teller machines (ATMs).

Between 2018 and 2019, the number of free-to-use (FTU) ATMs fell by 13%, while the number of pay-to-use (PTU) machines rose by 38%. This trend seems to have been more marked in more deprived areas.

ATMs provided 90% of all cash withdrawn in 2019, but people can also get hold of cash through bank, building society and Post Office branches or through cashback. There is further relevant data in our briefing paper Statistics on access to cash, bank branches and ATMs.

Some businesses appear to be less likely to accept cash. In one survey, a tenth of consumers reported occasions where businesses had refused to accept cash during the pandemic.

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 ensure continuing access to cash.

This prompted the Treasury to set up and chair the Joint Authorities Cash Strategy (JACS) group, bringing together the Treasury, 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 without having to make a purchase.

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