The UK’s cash system is on the “verge of collapse”, with ATM and bank branch closures being just “the tip of the iceberg”, a major new report has revealed.
The Access to Cash Review. published this week, says that the Britain is at risk of “sleepwalking into a cashless society”, which could leave more than eight million adults struggling to cope.
The independent review, commissioned by ATM provider Link, found that the UK is not ready to go cashless.
The Guardian reports: Debit cards last year officially overtook notes and coins as the most popular form of payment in the UK for the first time, and the review’s report predicted that cash could fall to just 10% of all payments within the next 15 years.
It also called on the government, regulators and banks to “act now or risk leaving millions behind”. A spokesman for the review claimed the UK’s cash system was “on the verge of collapse”.
The bill for running the UK’s cash infrastructure – from ATMs to cash-sorting centres – was about £5bn a year, paid for predominantly by banks (and, ultimately, consumers), said the report. But while the costs were largely fixed, income was declining quickly.
As a result, it said, “we have a cash infrastructure which is fast becoming unsustainable”.
The report added: “Some of these companies may consider exiting the market as its profitability declines – leading to the risk of disorderly collapse … Without an effective wholesale cash infrastructure, ATMs won’t get filled, cash deposits won’t get counted, and we won’t trust the value of money.”
The report’s authors said the UK was “not ready” to go cashless, and that despite the runaway growth of contactless and mobile payments, a “significant number” of people – about 2.2 million – were currently using cash for all their day-to-day transactions.
Nevertheless, the volume of cash removed from ATMs is falling fast, and Which? has estimated that cash machines around the UK are closing at a rate of 300 a month.
The consumer group this week also highlighted the vulnerability of digital banking, revealing that British banks were were being hit by IT or security failures that prevented customers from making payments at an average rate of more than once a day.
Nicky Morgan MP, chair of the Commons Treasury committee, welcomed the report, saying that “the simple truth is that leaving the future of cash to be determined by market forces will not work”.