Access to Cash Review - legislation is needed to ensure people aren’t left behind.

On November 25th, the government’s call for evidence into plans to protect access to cash closed for submissions. The centrepiece of the proposals involved a change in legislation to allow cashback to be offered at shops without consumers having to make a purchase, as well as making the Financial Conduct Authority responsible for ensuring the cash system benefits consumers and SMEs.

The call for evidence is the culmination of nearly two years of high profile interest in the future of cash. In March 2019, the Access to Cash Review reported that there has been a pronounced shift from cash to card and digital payments over the past 10/15 years, and it is set to continue over the next decade. ‘If we fail to plan and prepare for it properly’ said the Review’s chair Natalie Ceeney, ‘a cashless society would do significant harm to the millions of people who would be left behind’.

For those of us who have been involved in the debate about the future of cash for some time, government attention, and imminent action, is very much welcomed. The increasing use of cards and contactless for day-to-day payments has led to dramatic headlines heralding the cashless society, ignoring the millions of people who have yet to join the digital revolution and remain predominantly cash users, as well as the fact that no country has yet to go completely cashless.

The interest in cash has been amplified by the impact of Covid-19. As John Glen MP, Economic Secretary to the Treasury, notes in his foreword to the call for evidence, ‘whilst it is too early to judge the impacts of the COVID-19 pandemic on cash usage, it is clear that it has had both a significant impact in the short term, and that it will likely accelerate the trend of declining cash usage over the medium to long term. All this serves to heighten the risks to those that continue to rely on cash’.

Research conducted by Enryo over the past few months supports his view. Overall, 76% of people think they are using less cash for day-to-day purchases because of the impact of Covid-19, while 22% disagree. Drilling a bit deeper, before Covid-19, 43% of people said they used cash more than once a week to pay for day-today items, 10% said they used it less than once a month and 7% not at all. In September, 24% of people reported using cash more than once a week, 23% less than once a month and 12% of consumers, not at all.

Whilst cash is certainly being used less in comparison to before the pandemic, (indeed, less payments overall will be made this year due to shop closures and the suppression of normal behaviour), people continue to use it. This points to a section of society that has not been sufficiently influenced by recent events to change their spending behaviour. Headlines suggesting that cash is unhygienic (new Bank of England research has found the virus does not survive at very high levels on banknotes), and signs in shops encouraging card use, has not impacted this group suggesting their reason for using cash is more entrenched. Perhaps they aren’t confident in using digital or card payments, don’t own a smartphone or feel more in control of their finances with cold, hard cash.

This is not an issue specific to Covid-19 but the pandemic, and subsequent actions, have led to some people being left behind. Our research showed that in September, 10% of people experienced situations where they would prefer to use cash but have been refused at the till (up from 5% in July) and neatly a quarter of people (24%) experienced situations where they would have prefered to use cash but instead used a card as the place they were in discouraged cash payments.

This echoes research commissioned by Which? that two in five consumers (43%) who reported being unable to pay with cash said that they did not have another payment method at the point of purchase. One in three (32%) of the respondents said they were unable to buy the item at all as a result. Four in ten respondents (38%) left empty handed when trying to pay for groceries, while the figure stood at almost one in five (17%) for those attempting to purchase medicine. 

We are seeing the consequence of the absence of a strategy for payments that takes into account the different pace at which people adopt new behaviour. It is a travesty in normal times that people are unable to buy groceries or medicine, let alone in the midst of a pandemic.

It is clear that something drastic is needed. Providing more ways to access cash will do no more than scratch the surface if it can’t be spent. Action is needed, which is why in our response to the call for evidence, which we jointly submitted with Vendercom, we have called for the government to legislate to ensure that people can use cash to buy essential goods, such as food, fuel and medicine. This is not for the sake of saving cash, but to ensure that people aren’t discriminated against for how they manage their finances or how they choose to pay for their daily goods.

The government should also produce and enact a strategy to ensure universal access to payments that places merchants and consumers first; allowing consumers to use cash, cards or any other regulated method of payment to purchase essential goods and services, and ensuring merchants can accept these on fair terms.

It is true that Covid-19 has accelerated the decline in cash but millions of people still depend on it. Now, more than ever, they need the government to support them and ensure they are not an unintended casualty of 2020.

David Fagleman is co-founder and Director at Enryo.