Cash Use on the Rise for 2nd Year in a Row

Undated file photo of a wallet with bank cards and sterling pound notes. Peter Byrne/PA

Cash use has risen for the second year in a row and continues to play a crucial role in people’s budgeting amid cost-of-living pressures, new data suggest.

Last year, 19.9 percent of transactions used cash as a form of payment, an increase from 18.8 percent in 2022.

A report published by the British Retail Consortium (BRC) on Thursday said that a sizeable minority of the population sees cash as a “a vital form of payment.”

“Persistent inflation and the cost of living crisis continued to affect households across the country and many consumers used cash to budget more effectively,” said the BRC payments policy adviser, Chris Owen.

The BRC said that all large retailers are committed to accepting cash in their stores. Cash transactions have a lower processing cost than other forms of payment, the report noted, welcoming new protections for consumers’ access to cash.

Financial Conduct Authority (FCA) rules, under which local residents, businesses, and shops can request assessment of access to cash in their area, came into force in September.

These regulations require banks and building societies to respond to such requests from residents and community groups, ensuring any gaps in local cash access are addressed.

Once a request is made by charities or local groups, the UK’s main ATM network LINK will have 12 weeks to do an assessment.

Where significant gaps are found, designated banks and building societies will follow through with the changes, such as maintaining bank branches, installing an ATM, and introducing a banking hub.

The rules also ensure that the vast majority of people and businesses are no more than three miles away from cash withdrawal facilities.

Vulnerable Groups

Campaigners for financial inclusion of vulnerable groups have reported that access to cash can be essential for some people’s safety and survival.

Speaking to the Treasury Committee on Wednesday, charity leaders warned that access to cash is “no small issue.”

Deidre Cartwright, public affairs and policy manager at charity Surviving Economic Abuse, said: “Victims and survivors of economic abuse and domestic abuse more widely are dependent on cash for their safety and for their survival.

“And we know this because victim survivors’ access to a bank account is controlled and often times access to cash is their only means to actually accessing essentials for themselves and their children. It’s a means for them to be able to escape an abuser, especially when that abuser can track them through a bank account, so it’s incredibly important for their safety and survival.”

Age UK said that older people who don’t use the internet or manage money online find cashless payments challenging.

Restrictions on cash acceptance also affect people who don’t own a mobile phone and are limited in where they can park and what public facilities they can use.

Ron Delnevo, chairman at the Payment Choice Alliance, told the hearing, “I know some older friends who’ve stopped going to certain places … because they couldn’t park without having an app.”

The hearing is part of the Treasury Committee’s inquiry into physical cash acceptance.

Dominance of Card Payments

The BRC reported that debit cards remained the most common method of payment last year. The use of debit cards rose to 62 percent of transactions and 66.7 percent by spending.

Card payments, including credit cards, accounted for over 75 percent of transactions and 85 percent of spending.

Owen confirmed the dominance of card payments on the market and noted that card fees were on a continued rise at a substantial rate. He called on the Payment Systems Regulator to introduce price caps on fees and price rebalancing measures.

The BRC said that the fees the card companies face lack transparency or justification. It called for a commercial cards market review, given the 14 percent rise in commercial card fees, to tackle the lack of competition and rising costs in the payment market.

Elsewhere, the report found that overall, customers visited shops more frequently last year but made smaller purchases.

The average amount spent per transaction fell from £22.43 to £22.03, while the total number of transactions rose from 19.6 billion to 21.0 billion.

PA Media contributed to this report.