Millions of consumers across the UK face being left behind if the government does not plan properly for an increasingly cashless society, according to an interim report from the Access to Cash Review.

The research revealed that despite the increasing use of cards and electronic payments, approximately eight million (17 per cent of the population) people say cash is an economic necessity.

The independent review’s first report follows extensive research in the UK and overseas, consulting with over 120 organisations and conducting workshops across the country.

In 2017, debit cards overtook cash as the most popular payment method for the first time. Consequently, cash use has halved in the past 10 years and is forecast to halve again in a decade’s time.

The UK generated £81.3 trillion in cashless payments in 2016, almost double the amount spent in any other European country, according to research from Expert Market.

Countries like Sweden - which was consulted as part of the review - are pushing ahead with plans to phase out physical currency in favour of electronic money.

The report found that if the UK's move to a cashless society happens too quickly, risks to people include:

• Viability of rural communities: where broadband and mobile connectivity is poor and where the local cash infrastructure is reducing.
• Loss of independence: for people who currently rely on cash for informal support.
• Rising debt levels: for those on tight budgets, using cash helps to stay out of debt.
• Financial abuse: cash can give independence in a difficult or abusive relationship.
• Poor paying more: denied access to goods and services which can be bought online or via direct debits, or even given reduced access to the high street as shops and cafes go cashless.

The research shows that the UK is split on whether people believe there will be a cashless future in their lifetime. The statistics show that 41 per cent of Britons believe it will happen, compared to 38 per cent who believe it won’t.

However, all consumers acknowledged that there are significant risks to groups and the economy of going cashless, including:

• 74 per cent worry that it would take away people’s right to choose.
• 72 per cent believe that vulnerable groups of people would be more likely to get scammed or defrauded.
• 67 per cent believe that people on low incomes might struggle to balance their household budget.
• 65 per cent believe that people with mental health issues might find it harder to manage their money.
• 56 per cent believe that rural communities would become less viable.

The review, chaired by the former Financial Ombudsman Natalie Ceeney, is assessing consumer requirements for cash over the next five to 15 years. She stated that the decline in the use of cash has been dramatic, and with rapid technology development and adoption this trend will continue.

“As cash use continues to fall, we need to safeguard the use of cash for those who need it, and at the same time work hard to ensure that everyone can participate in this digital economy,” added Ceeney.

Ben Broadbent, deputy governor for monetary policy at the Bank of England, explained that it is important the public has choice in how they make payments.

“The UK has seen a decline in the use of cash, however, we also think that cash is likely to remain a very important part of the payments landscape for a long time – it is true that an unmanaged decline in cash use could limit choice for people and businesses who prefer to use cash.”

The review will be publishing its policy recommendations in the New Year, with recommendations to government, regulators and other policymakers on what needs to be done so that no one is left behind.

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