Cash decline accelerates during pandemic
Access to cash has been a talking point within the finance sector in recent years, but the cash decline accelerates during the pandemic.
Now, a consumer group is raising concerns about vulnerable people in society being able to get hold of the cash they need to pay for essential goods and services.
Which? says the government should take action to support the fragile cash system.
Their new research shows that many vulnerable people who have been unable to shop for themselves had used cash to reimburse friends, family and neighbours who shopped on their behalf.
Speaking to more than 2,000 people, Which? found that one in five were helping someone else during the Covid-19 crisis, either by managing their finances or shopping for food or other essentials.
Of these, around half had been reimbursed in cash.
According to the research, one in 10 people tried to pay a retailer using cash during the pandemic but were refused.
During the coronavirus pandemic, there has been an acceleration in the use of contactless payments in shops.
Cash machine usage across the UK has fallen sharply as more people shop with cashless payment methods.
Before the onset of the coronavirus crisis, during the March Budget, the government pledged to preserve access to cash for as long as needed.
Its Access to Cash Review concluded that more than 8 million adults in the UK would struggle in an entirely cashless society.
Cashless payment methods are growing in popularity.
Debit cards have been the dominant form of spending since 2017 when they overtook cash as the leading payment method.
Within a decade, cash is predicted to fall to a share of 16% of all payments.
One factor accelerating the decline of cash is an increase in the contactless payment limit to £45.
In its report, Which? called on the government to take action so vulnerable people can keep using cash to pay for essential goods and services.
One intervention they say the government should make is to give businesses information about how to handle cash safely. They also want the government to bring forward legislation designed to protect cash for the most vulnerable in society.
Gareth Shaw, head of money at Which?, said:
Failure to do so risks excluding millions of people from engaging in the economy.
It’s vital that the already fragile cash system is not left to collapse completely as the UK’s shift to a cashless society accelerates.
Commenting on the report, Caroline Abrahams, Charity Director at Age UK, said:
It’s deeply worrying that some older people are telling us that they are finding it so hard to access cash and how worried they are about how they will pay for their shopping, and are concerned their supplies of essentials will run out soon if they have no means of paying for more.
While we welcome the initiatives that companies are undertaking they don’t solve the problem for all older people. We are concerned that the most vulnerable will be the hardest hit as they will be unable to use the new services that have been established. It is crucial that every bank does everything it reasonably can to help these customers, including going beyond the new services they have already established.
Making sure that older people have the coins and banknotes they need to keep spending is surely in the best interests of businesses and the economy too. Before the pandemic started the government committed to legislating to protect access to cash for as long as people need it and this must happen sooner rather than later.