The UK’s cash system is on the “verge of collapse”, with ATM and bank branch closures just “the tip of the iceberg”, a new report reveals.
The Access to Cash Review published today warns that Britain’s cash infrastructure is in danger of collapsing.
The independent review, commissioned by ATM provider Link, found that Britain is yet not ready to go cashless.
It says that the UK is at risk of “sleepwalking into a cashless society”, which could leave around eight million adults struggling to cope.
The elderly and disabled could lose their independence, rural communities could be threatened and debt could also increase.
There are fears the country could be a cashless society within the next 15 years if the current declining usage trends continue.
Cash is only used for three in every 10 transactions, down from six in 10 a decade ago and is forecast a fall to as low as one in 10 transactions within the next 15 years.
The report says that this shift away from cash towards digital payments is placing significant strain on the UK’s cash infrastructure, which costs around £5 billion a year to run.
Bank branch and ATM closures are leading to an increasing number of retailers going cashless.
In response, the review is calling on the government, regulators and banks to act now to ensure cash remains viable for as long as people need it.
The report recommends a “guarantee to cash access” is introduced, with businesses providing essential services required to accept cash.
It also suggests a more “efficient, effective and resilient” wholesale cash infrastructure to help ensure that cash remains viable as its use declines.
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Natalie Ceeney, independent chair of review, says “sleepwalking into a cashless society could leave millions behind".
She adds: “We need to guarantee people’s right to access cash and ensure that they can still spend it.
“We need leadership of this critical issue from our regulators and government, but success will rely on banks continuing to properly support their customers who rely on cash.”
As the report was released, the Bank of England announced it will work with the industry to develop a new system for wholesale cash distribution that will “support the UK in an environment of declining cash volumes”.
Sarah John, chief cashier at the Bank of England, says: “We are committed to cash. Although its use is declining, many people, including vulnerable groups, still prefer to use cash.
"It is important that everybody has a choice about how they make payments."
The Bank of England says it will convene a meeting of stakeholders to develop a new system for distributing wholesale cash despite declining volumes.
Nicky Morgan MP, chair of the Treasury Select Committee, says: “The complexity of this issue cannot be overstated, but the simple truth is that leaving the future of cash to be determined by market forces will not work.
“It is now for policymakers to pick up the mantle and bring about the changes required to secure long-term access to cash for those that need it. Tinkering around the edges to preserve the status quo will not work. It’s clear that something more fundamental is needed.”