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A coalition of UK businesses, charities and consumer groups have written to the chancellor urging him to protect cash as a "critical payment method" for consumers and businesses.
While the government’s Future of Payments Review is ongoing, the signatories of the letter have called on the Treasury to ensure that cash remains “part of the payments mix” of the future.
In particular, the signatories highlighted the “continued importance” of cash to the financially vulnerable, digitally excluded and small businesses.
In 2021, according to UK Finance, cash made up 15 percent of all payments in the UK, making it the second most-common payment method.
Responding to the government’s Cash Access Policy Statement published last month, the signatories to the letter welcomed the statement, saying it marks a “positive first step”.
However, they also said that a “more comprehensive effort” is required to ensure the robust funding and safeguarding of the UK’s cash network.
“As the cost-of-living crisis escalates, cash has become an essential tool for budgeting, allowing for greater financial control and flexibility,” they said in an additional media statement.
“However, the viability of the UK’s cash infrastructure is under threat due to bank branch closures and successive reductions in funding for the free-to-use ATM network.”
Free-to-use ATMs make up almost 80 percent of the country’s cash machines, but since 2018 14,400 of them have been lost and an additional 37,000 face the risk of being converted to pay-to-use.
“This trajectory not only jeopardises the role of cash in future payment systems, but also endangers the financial inclusion of vulnerable populations,” they said.
“While the prime minister’s endorsement of the free cash network is encouraging, the devil will be in the detail in terms of how the government and FCA implement its plans for cash.”
James Lowman, signatory of the letter and chief executive of the Association of Convenience Stores, said that a commitment to “improved ATM interchange fees” could strengthen the UK’s free-to-use ATM coverage.
Other signatories to the letter include the Federation of Small Businesses (FSB), the Petrol Retailers Association (PRA), the Rural Services Network (RSN), Positive Money and NoteMachine, the UK’s second-largest ATM provider.
Steve Makaritis, CEO of NoteMachine, said the government and the Financial Conduct Authority (FCA) must use the Future of Payments Review and the Financial Services and Markets Act (FSMA) 2023 to maximise payment choice for businesses and individuals.
In June, as noted in the letter, a YouGov poll found that almost 70 percent of respondents said they would oppose the UK “becoming a fully cashless society”.
In addition, 71 percent of respondents said they support making it a legal requirement for businesses to accept cash payments, also known as "Payment Choice Act".
New legislation and regulation
Under the FSMA, the Treasury is required to publish a Cash Access Policy Statement. The statement sets out the government’s policies on cash deposit and withdrawal services, and is also intended to inform the FCA on how best to implement these policies.
Following the publication of the statement, the FCA has been tasked with establishing a definition of “reasonable” access to cash and “reasonable provision” of cash services.
As noted in the statement, the government said that “reasonable” access to cash should include free-to-use services, but does not necessarily preclude paid services.
However, the Treasury did not mention ATMs specifically in the statement, as highlighted by Ron Delnevo, chair of the Payment Choice Alliance.
Speaking to Vixio, Delnevo said that this allowed the Treasury to avoid the question of how ATMs are going to be funded going forward.
Delnevo, who said the Treasury is trying to “write ATMs out of the script”, declined to sign the joint letter for this reason, finding little to “welcome” in the Cash Access Policy Statement.
“It appears that HM Treasury and UK banks are trying to dump responsibility for cash access on to Post Office counters and cashback at small shops,” he said.
Out of 11,500 UK Post Offices, less than 1,500 have free-to-use ATMs, despite the Treasury’s increasing reliance on them for cash services.
“The cash access provisions outlined by HM Treasury very closely align with existing Post Office access criteria,” said Delnevo.
“This is logical from the HM Treasury viewpoint, because they ultimately expect that the vast majority of cash access in the UK will only be available over Post Office counters or via cashback.”
In his view, Delnevo said the Cash Access Policy Statement is “as good as useless”, as thousands of ATMs could be removed and yet the Treasury and FCA could still hit their proposed geographical targets for ATM coverage.
