Article

Cash use plummets across UK

According to a report by Link, which runs the ATM network in the UK, the use of cash is dropping in the country, mainly driven by online banking and card and contactless payments. But Link says it is committed to making free-to-use ATMs available where people need them.

iStock photo

July 23, 2019 by Amy Castor — Editor, Networld Media Group

Once upon a time, cash was the preferred way to pay for things, but now it's viewed as awkward, clumsy and even costly. These days, the use of cash is dropping in the UK, driven mainly by online banking and card and contactless payments, according to Link Scheme Ltd., which runs the ATM network in the UK and recently published "Preserving Access to Cash."

In fact, the UK is leading the way in terms of moving away from cash. Only the Nordic countries — notably Sweden — are seeing cash use disappear at a faster rate.

Link's report, which outlined the changes in cash and ATM usage in the country, found that the lack of cash has made it hard for the people who need cash the most — those who are unable or reluctant to use new technologies — to find an ATM nearby or at least a free one that won’t charge them to withdraw money.

The rise of contactless cards

Contactless payments are likely the key culprit in the declining popularity of coins and notes. While the technology has been around for nearly a decade, its use has picked up in recent years driven by more enabled cards, more merchant terminals and changes to the cost of using the cards.

Last year, almost 70% of all adults in the UK made a contactless payment, according to the Link report.

As a result, ATM transactions for the first four months of 2019, were down 8% compared to the same period last year. The largest declines in ATM use were in London, and the slowest were in the North East of England and Northern Ireland.

The actual number of cash withdrawals is declining more slowly, likely because people are withdrawing more money at once, so they can make fewer trips to the ATM.

Decline in free-to-use cash machines

As the number of ATM transactions decline, so too, do the number of ATMs. Link noted three categories of ATMs: branch ATMs, free-for-use ATMs, and pay-to-use ATMs.

The number of branch ATMs has been falling for years as banks shut down their branches. While the number of free, remote ATMs — mainly operated by independent ATM deployers — was on the rise until 2017, but began dropping after that.

Meanwhile, pay-to-use ATMs hit an all time high in 2007 with 27,000 machines across the UK. But that number fell to 11,000 by the end of 2018. After that, the number of pay-to-use ATMs began to go up again, but are still only at the levels of a year ago, according to the report.

In April 2019, there were 49,502 free-to-use machines and 13,147 charging machines. About 60% of ATMs in the UK today are IADs.

Keeping cash alive

Link is concerned about the continued availability of free access to cash amid ATM and bank branch closures.

A significant number of people and situations still need cash, both now and into the foreseeable future, according to the Link report that also said the organization was "determined" to operate a widespread, effective and efficient network to ensure cash is available for free to all those who need and chose it.

As part of its role, Link is working to ensure retailers continue to accept cash. So far, it said, cashless retailers were largely limited to cafes and the like at city centers where the impact on consumers is low.

It also recognized that maintaining a cash infrastructure was anything but cheap. The cost of handling cash in the UK is around £5 billion ($6.23 billion) a year, about £1 billion ($1.25 billion) of this being the cost of the ATM network. Ultimately, those costs get passed on to the consumer.

Cash machines were only part of the solution, nothing that align with other stakeholders, like post offices, where people in the UK can get free access to cash, will be an important part of the way forward.

As cash usage continues to decline, however, Link notes that at some point there will be left a "core of cash users" who will never give up cash or are only likely to do so over a much longer period.

About Amy Castor

Amy Castor has more than 20 years of experience in journalism and mass communications. In the last several years, she has gotten particularly interested cryptocurrencies, blockchain technologies and other evolving forms of payment. Her work has appeared in consumer and trade publications throughout the U.S., including CoinDesk, Forbes, and Bitcoin Magazine. She is now the editor of ATMmarketplace.com and WorldofMoney.com

Connect with Amy: