The government should take steps to ensure that there is sufficient cash in the economy for it to remain a viable payment option and to help charity shops manage the rising costs of handling cash, a review has recommended.
The Access to Cash Review, which was launched in July 2018 and published this week, has said that cost of handling cash is increasing because more banks are closing. This is driving up fuel costs as businesses are forced to send and obtain cash over longer distances via courier.
The review said that this problem particularly affects smaller retailers including charity shops. Because charity retailers are smaller than many commercial retailers, they cannot benefit from moving high volumes of cash and so accrue more costs from manual handling of cash.
It recommended that technological innovations be implemented, for instance by creating deposit-taking ATMs and smart safes to ease the strain on retailers.
“We need to change the underlying infrastructure costs or these unit costs to merchants will keep rising,” the report said.
The report also raised concerns about the future of charity donations. It found that 74 per cent of people surveyed believes that charities and homeless people would suffer in a cashless society due to fewer people carrying loose change.
“The trend towards carrying less cash is a challenge for charities, street performers and the like who have traditionally relied on cash donations,” it said.
However, it conceded that some research showed that cashless donations may present an opportunity for charities to solicit higher donations “beyond pocket change”.
The report predicted that in 15 years, only one in tentransactions would be made in cash. It warned against this, saying that 17 per cent of UK adults would struggle in a cashless society.
The review made five recommendations which include ensuring consumers can always get access to cash and ensuring that cash is accepted in shops.
Natalie Ceeney, independent chair of the Access to Cash Review, said: “There are worrying signs that our cash system is falling apart. ATM and bank branch closures are just the tip of the iceberg, underneath there is a huge infrastructure which is becoming increasingly unviable as cash use declines.”
“If we sleepwalk into a cashless society, millions will be left behind. We need to guarantee people’s right to access cash and ensure that they can still spend it.
“We need leadership on this critical issue from our regulators and government, but success will rely on banks continuing to properly support their customers who rely on cash.”
Nicky Morgan MP, chair of the Treasury Select Committee, added: “The simple truth is that leaving the future of cash to be determined by market forces will not work.
“This report sets an expectation that the government, the regulators and industry will respond with a plan of action. I support this approach and consider that it would be highly negligent for those parties not to provide a considered response."
The report, which was funded by cash network LINK, was compiled by meeting different experts and interest groups, like banks. Some 2,000 consumers were also surveyed.