The warning lights continue to flash for the future of cash. Here’s why the government cannot afford to ignore them.
For the 5.4 million people in this country reliant on cash in their everyday lives, the story of dwindling access to it is a familiar one. When we surveyed over 2,000 people in July, more than half of them had encountered access to cash or banking issues.
But it is the speed at which these changes are happening that is of most concern.
Our analysis of recent data from LINK, the UK’s largest cash machine network, revealed that the number of ATMs in service has dropped by almost 8,000 (or 13 per cent) since March 2020 and shows no signs of recovering now that the economy is opening up.
It isn’t just ATMs. Bank branch closures have also ramped up since the first national lockdown: 801 have shut their doors so far and a further 103 are earmarked for closure by the end of the year.
A worrying trend
As we look to build back better from the pandemic, we cannot exclude certain groups of consumers, including those reliant on cash, from participating in the recovery. Encouraging cash usage also helps boost local economies since we know that those who take cash out are more likely to spend it locally.
Yet protecting access to cash is only part of the problem – the other, equally important, side of the coin is whether shops and businesses even accept it. Unless retailers can commit to taking cash as a payment method, ensuring reasonable access to it will hardly matter.
Our survey in June found that over a fifth of respondents had experienced cash refusal since March. A small number of shops have previously refused to accept cash due to the cost of handling it (security protection, paying people to count and deposit it). But many have stopped doing so during the pandemic amid confusion over how the virus spreads, or because they have shifted their business models online.
However, data suggests that this reluctance to accept cash is happening against the will of consumers.
We found that over 80% of people thought that businesses and shops should continue to take cash, including those that don’t use it themselves. Businesses agree. A recent Post Office survey revealed that far from finding cash to be a relic of the past, two thirds of firms thought it was important to the recovery of the UK retail industry.
Our Cash Friendly pledge
Firms that can should state clearly that they will will continue to accept cash from consumers who still rely on it – as many have done by taking Which?’s Cash Friendly pledge.
The initiative is supported by organisations such as the Bank of England and British Retail Consortium, large retailers such as John Lewis and Aldi, as well as many independent shops and businesses across the UK.
The government has proposed that the FCA becomes the lead regulator of the cash network. In this role, its responsibilities should extend to tracking levels of cash refusal to better understand the scale of the issue. If necessary, it should also develop solutions so that cash dependent consumers aren’t left in a position where they can’t purchase essential products and services.
The warning lights are flashing for the future of cash – and the government cannot afford to ignore them.