Vulnerable people risk being left with no way to pay for essential products and services as the coronavirus crisis further accelerates the UK’s shift to a cashless society, new Which? research reveals, as it calls for government action to ensure that the cash system does not collapse at a time when millions of people still rely on it.
A survey by the consumer champion found that half (51%) of those looking after the finances or grocery shopping of someone else had been paid in cash in return for doing shopping, highlighting its continued importance in communities across the country and the huge challenge that a cashless society presents for those who are not yet ready or able to make digital payments.
As consumers are also experiencing difficulties paying with as well as taking out cash, Which? is pressing for action from the government and financial regulators to ensure millions of people aren’t left abandoned as a result of the outbreak that’s put additional pressure on the UK’s already fragile cash network.
The Which? study of more than 2,000 people, conducted at the start of May, reveals that nearly one in five reported that they were managing finances or ordering food and essentials for someone outside of their immediate household.
Of those, 32 per cent had bought food from a shop for others and been paid for it in cash, and 29 per cent had ordered for someone online and been paid for it with cash – while some responded that they had done both.
Which? has heard of numerous cases where cash is essential for this sort of help, including one person who is reimbursed in cash for delivering supplies to their vulnerable 91-year-old uncle, and another who shops for neighbours twice a week – after cash and a shopping list have been posted through their door.
The research also highlighted that one in 10 people were refused by shops when trying to pay for items with cash, at a time when only those that were permitted to sell essential goods were open. A quarter of those were left unable to purchase the item in question on at least one occasion as they had no alternative means of payment.
And while nearly one in three people reported still using cash to make some or all of their payments, seven per cent said they had found it more difficult to take out cash since the outbreak began.
With many retailers now encouraging non-cash payments and banks reducing branch opening hours, Which? supports schemes introduced by banks and businesses to provide access or alternatives to cash during this crisis.
However, it remains unclear how effective these have been at addressing the root of the problem. It believes these are unlikely to be a viable long-term fix, and that cash-dependent consumers could be left completely excluded from engaging with the economy if cash is not urgently protected.
Despite the clear need for cash, the coronavirus pandemic has pushed the cash system that millions of people still rely on into deeper peril, just months after the government vowed to protect it.
In March, the government committed to legislating to protect access to cash for as long as people need it, after warnings that the system could collapse within two years. This followed investigations from Which? that found the UK had lost a staggering 10,500 free-to-use cash machines since 2017, and over a third of bank branches in less than five years.
However, the coronavirus pandemic has drastically reduced the timeframe for intervention, and the government’s pledge risks becoming obsolete if current trends continue to go unchallenged, which risks cutting off millions of people from the main form of payment they rely on to purchase essential products and services.
Coronavirus has rapidly accelerated the decline in cash use. Latest figures from Notemachine, one of the UK’s largest ATM operators, show that cash withdrawals have reduced by 45 per cent since lockdown began – although the average value withdrawn has increased by 13 per cent.
And while figures from Link, which manages the UK’s largest cashpoint network, show that approximately £1 billion is still being withdrawn from ATMs every week, it says the overall decline means that the current level of cash usage is now at a level that was not expected for five years.
As well as urgently introducing the legislation it committed to in the budget, Which? is calling on the government to take all necessary steps to ensure people can continue to use cash to pay for essential goods and services during the coronavirus pandemic. This includes providing support for businesses to accept cash and offering clear guidance on how to handle banknotes and coins safely.
It also believes the FCA must collect and publish information about emergency measures that individual banks have put in place, including an assessment of their long-term suitability and effectiveness.
Which?’s proposals have been backed by a diverse group of organisations that all share its concerns about the implications of the rapid decline of cash availability and acceptance. These include the Access to Cash Review – led by Natalie Ceeney, Age UK, the RSA, Independent Age, Alzheimer’s Society and Link.
Gareth Shaw, Head of Money at Which?, said:
“The coronavirus outbreak has shown that cash remains vital to many consumers, particularly for vulnerable people who rely on it to pay for essential supplies.
“As a result, 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.
“The government must urgently press ahead with the legislation it has already committed to before it becomes obsolete, as failure to do so risks excluding millions of people from engaging in the economy.”