Why many people will keep using hard cash - Rocio Concha of Which?

Although it is up to individual retailers to decide which payment methods they want to accept, Which? has consistently encouraged those who are in a position to do so to accept cash.

Enabling customers to pay this way isn’t just more inclusive - our research has continually shown that cash users tend to be on lower incomes - but it could also be beneficial for local small businesses and, more generally, the future of our high streets.

Unfortunately, cash users are facing barriers just to spend their own money in shops, such as cafes, restaurants, bars and pubs. The reasons given by businesses have included concerns over employee safety in handling cash as well as the time and resources, and therefore costs, associated. Others have, again since the pandemic, shifted their business models to be more online.

Some may argue that all of this is the natural direction of things. Yes, the pandemic may have had an impact on the shift to digital payments - but it was an acceleration, not a rerouting, of a journey most consumers were already on.

However, there are reasons to believe that this is all happening at a time when the importance of cash is actually growing. As the cost of living crisis continues, more people - including those who wouldn’t have typically used cash in the past - are turning to it to help manage their finances. Budgeting, they find, is sometimes easier to do when you have physical money taken out at the beginning of each week or month.

Indeed, the Post Office announced that business cash deposits totalled £1.09 billion in December, only slightly down on the record £1.2 billion handled in August 2022, while personal cash withdrawals totalled a record £892 million in December - up month-on-month from November’s £838 million. (For context, it was £801 million in December 2021).

Yet despite the increasing reliance on cash, its infrastructure remains under pressure - chiefly through the closure of bank branches and ATMs. Which? research has shown that almost a quarter of free-to-use ATMs have vanished since 2018 and almost half of the UK’s bank branches have closed since 2015.

Recognising the continued demand for cash services, the banking industry has introduced various schemes to fill the gaps left by physical branches. For instance, shared banking hubs - a site where customers from different banks can deposit and withdraw money as well as access face-to-face services. While welcome, such initiatives remain voluntary, meaning that banks can walk away from them at any point.

At Which?, we have long campaigned for improved access to cash and believe that while such initiatives are beneficial in supporting access to cash, they need to be buttressed by long-awaited government legislation. That includes giving the Financial Conduct Authority, the regulator, an obligation to monitor and report on trends in cash acceptance so it’s on the front foot in addressing any concerning developments, such as certain types of retailers stopping accepting cash.

Which? will continue to campaign to amend this legislation in order to give the FCA the powers it needs to guarantee minimum levels of free access to cash so people who want to use cash do not have to fork out their own money to get their hands on it.