The ability to make payments is fundamental to any individual’s participation in the economy. We believe that people should be able to use their money in the way they choose, and that fair and low-cost access to payments should be recognised as a universal need, like water or electricity.
Cash is still relied upon by 2.7 million people, including many who are on low incomes who may not have bank accounts and access to contactless debit cards, the elderly, or those struggling with ill health. Some find it useful for budgeting, while others are responding to a banking system that is failing to serve their interests. If we lose our access to cash, millions will struggle to manage their money and pay for the things they need.
The UK is on the verge of losing thousands of ATMs, as banks’ determination to cut costs, spurred on by competition from VISA and Mastercard, is set to make many parts of our cash network unprofitable. Most ATMs operate via the Link network and are funded by transaction fees paid by banks and building societies. Link has recently confirmed plans to lower those fees, meaning that many ATMs may no longer be viable.
Action by the regulator is the only thing standing in the way of the decline of the UK’s ATM network, but it’s unclear that it will take the necessary steps to intervene. Government should assign the Payment Systems Regulator the explicit job of protecting people’s access to cash and new enhanced powers to stop closures.
As is already the case in countries like Sweden, shops and restaurants will increasingly refuse to accept cash, putting products and services out of reach for potentially millions of people. Positive Money believes that Government should update the legal definition of legal tender, to require retailers to accept cash as a means of payment.
Conversely, if people want to store their money and make payments electronically, they should have the opportunity to do so without facing hidden costs or unnecessary risk. The Government should work with the Bank of England to introduce a digital version of cash, and set up a public payments provider with the specific job of reaching those who are currently excluded.