The UK’s cash payments system could collapse in two years, the industry has warned, as the Treasury is being urged to step in to save it.
Companies which circulate, sort and distribute coins and notes say the rapid trend towards digital payments will soon render their businesses unprofitable, sources told the Daily Telegraph.
© PA Wire/PA Images A view of the Bank of England in London. (Photo by Kirsty O’Connor/PA Images via Getty Images)At present just over a third of payments made in the UK are cash but this is set to plunge in the coming years.
It is understood that most businesses involved in the cash system have given it between two and five years before it will become commercially unviable in its current form.
Link’s “Access to Cash” review published today warned that the system was on “the verge of collapse” with bank branch and ATM closures leaving entire communities without a hole in the wall just the “tip of the iceberg”.
It recommends that a “guarantee of cash access” should be introduced to help the UK avoid sleepwalking into a cashless society, which would mean businesses providing essential services like energy firms and supermarkets would be legally required accept cash payments.
Natalie Ceeney, independent chair of the review, is calling on the Treasury to regulate access to cash in order to save it. Cash should be seen as a core part of the UK’s infrastructure and not just a commercial issue, it said.
© 2017 Getty Images BATH, ENGLAND – APRIL 04: In this photo illustration the new £1 pound coin is seen on April 4, 2017 in Bath, England. Currency experts have warned that as the uncertainty surrounding Brexit continues, the value of the British pound, which has remained depressed against the US dollar and the euro since the UK voted to leave in the EU referendum, is likely to fluctuate. (Photo by Matt Cardy/Getty Images)The report said: “For consumers, we believe that it is both sensible and commercially viable for the banks and regulators to offer a “guarantee” of cash access.
“In part, they can do this by encouraging innovative ways of accessing cash, rather than just protecting increasingly unviable ATMs or, worse, charging consumers for access.
“To protect cash acceptance, we believe that if we can help the banks keep the costs of cash down as its use declines, and to innovate around cash deposit solutions, then there will be fewer commercial incentives for retailers to stop taking cash.”
© Provided by Telegraph Media Group Limited Map of independent ATM concentration
The review is funded by cash machine network Link, but is independent from it. Fears over access to cash have been heightened amid bank branch and ATM closures – leading to worries that people’s access to physical money, particularly in rural areas, is disappearing.
But the report said the problem is not just about people being able to withdraw cash – it is also about whether, in future, people will be able to make purchases at places which accept cash payments. It said the economics of handling and accepting cash is likely to lead to an increasing number of retailers going cashless.
Nicky Morgan, who chairs the Treasury Select Committee, said: “The publication of this report marks an important milestone, and it’s clear that the hard work for policymakers must start here. “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.”