Cashless UK may come too soon, experts warn

Cash payments are likely to fall to as little as 10 per cent of all UK transactions within the next 15 years, according to a recent study funded by Link, ‘Access to Cash’. With card and digital transactions proving far quicker and more convenient for most day-to-day transactions, 2017 saw debit card payments overtake cash for the first time.

This shift towards non-cash forms of payments is itself having an impact on the availability of cash. The report highlights that the cost of running the network of ATMs is £5bn, but falling demand for cash is making these machines less economical to run. Findings by Which? estimate that ATMs are closing at a rate of approximately 300 a month, restricting access to cash in many areas and increasing the drive towards cashless payments. However, finance experts are calling for government and regulatory intervention to save Britain’s cash system, on which many people remain fully dependent.

Eight million still rely on cash

The report’s author, former financial ombudsman Natalie Ceeney, warned that this trend could see the demise of cash before the nation is ready. She said, ‘If we sleepwalk into a cashless society, millions will be left behind.’

Over eight million adults in the UK (17 per cent of the population) rely on cash to make payments every day, according to interim findings published in December. In particular, people based in rural areas may find that poor broadband and/or mobile connectivity can make it difficult to pay for things digitally. Older generations may also struggle with some digital payment services. Furthermore, around 1.7 million people in the UK do not have a bank account, and 90 per cent of them are on low incomes and have low overall household income. The decline of cash threatens to leave these left-behind individuals even further behind.

The UK’s cash conundrum

The report argues that a new, more efficient cash infrastructure is required in order to keep cash in circulation for as long as society deems necessary. Currently the cost of maintaining the ATM network is borne by the banks, with bank customers ultimately footing the bill. The report also suggests that the decline in the use of cash is being accelerated by retailers and other businesses who are reluctant to accept cash because of the administration time, costs and higher insurance premiums.

Experts are now calling for regulations and incentives to ensure people can continue to get cashback in local shops and pay household bills in cash. Another proposal is for secure lockers and smart ATMs that allow businesses to deposit cash more easily.

In addition to measures protecting those who currently depend on cash, there is also a clear need to prepare the country for the shift towards a truly cashless future. The greatest challenge will be to cater for those who still struggle with other forms of payment, and who may be largely or wholly reliant on cash. Opportunities exist for FinTech firms and mainstream banks to educate and guide people on cash-free alternatives, while being more aware and accommodating of their specific needs and circumstances.