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UK Treasury explores future of cash

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October 15, 2020

The U.K. Treasury is launching a six-week "call for evidence" on ideas and feedback regarding what the impact would be on communities if the U.K. went cashless or digital in the future and it's asking for public input on how to improve cashback programs, what impacts cash acceptance and where regulatory responsibility should sit.

The news comes as there is a growing concern in the U.K. regarding the difficulties rural communities have in getting access to banknotes and coins. The concern is due in part to the closure of bank branches and ATMs during the pandemic when many rural areas were cut off from cash access.

The Treasury wants the Financial Conduct Authority to take control of securing the future of cash, pointing out its decline through the years. Ten years ago, the Treasury reported cash was used in six out of 10 transactions; in 2019, it was used in fewer than three times in 10 purchases, according to a BBC report.

During the pandemic, the EU instructed businesses to offer cashback at all stores, regardless of size and purchase. Unfortunately, the idea was not widely adopted and cash access remained a concern for the elderly and those in rural areas. The EU is considering scrapping this rule, which is still in effect, altogether.

In terms of cashback programs, last year shoppers received cashback when paying for items at a cash register, making it the second most used method for withdrawing cash in the U.K. behind ATMs.

The Treasury also wants views on putting the FCA in charge of ensuring that the cash system benefits consumers, as well as small and medium-sized businesses.

Natalie Ceeney, author of the Access to Cash Review report that highlighted the dangers of a cashless society, revealed eight million people are at risk in the U.K. from the demise of cash.

"This [Treasury consultation] is increasingly urgent. Last year we warned that the U.K. was sleepwalking into a cashless society. Covid-19 has placed even greater strains on the whole system. The devil will be in the details and I look forward to seeing the government's proposal in full," Ceeney told the BBC.