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Are we really ready for a cashless society?

Woman shopping

Too rash in getting rid of cash?

Banks are encouraging us to go cashless, but are we really ready for it? Are they?



Mervyn Kohler, External Affairs Adviser at Age UK, suggests the closing of retail banks and removal of ATMs is an overzealous move to get us to go cashless when some of us aren’t ready to.

In the UK, some 3,300 retail bank branches have closed since 2015, meaning that two thirds of the network has closed over the last 30 years. Where once we had over 20,500 branches, now we have 8,837.

But the new threat to banking services and particularly access to cash is ATMs closing and being removed. Following the introduction of new funding arrangements for ATMs, closures have picked up speed, and in the last six months of 2018, almost 500 were closing each month.

Failure to prepare…

This is the cashless society arriving without appropriate planning and preparation. Many people will adjust and adapt to a world without cash, but banks have had some spectacular IT problems which have closed down some of their electronic services, and there are parts of the country with poor broadband services which simply cannot access electronic money transactions.

In these circumstances, cash is a very useful reserve facility which keeps our transactional economy going. Almost 3 million people are reliant on cash completely, and for more than 25m, it is still a necessity. More than 9m adults have low digital literacy, and 4.5m do not have access to the internet. The cost of cybercrime – protecting electronic and digital payments – is £3.1bn, whereas the value of old-fashioned counterfeit notes in circulation is ‘only’ £4.83m.

Staying safe online

The internet has lots of positive aspects and helps us to do some incredible things, but there are aspects we need to watch out for too, including online scams.

Why the hurry?

The shift away from cash is ‘irrefutable’ according to a report from the Access to Cash Review (published in December). Cash transactions account for about 40% of all payments – down from around 55% five years ago, but still a highly significant number. But if this is where we are heading, it is still too soon to suggest we’re ready to go cashless.

There have been a few encouraging statements in the past few weeks but until now the Government has presided over all these developments with masterly inactivity. Even RBS, still effectively in public ownership, is free to make these decisions around access as it sees fit – from the Government’s point of view these are commercial and operational considerations, and legitimately for the banks and the market to make alone.

Access to banking needs attention

The Treasury Select Committee is not so sure, and recent reports from Which? and the Royal Society of Arts have been nudging towards a more interventionary, regulated approach. It seems premature to run the infrastructure down – the bank branches and ATMs – before adequate alternatives and public acceptability is ready for a switch. Age UK has long argued that access to banking needs urgent attention.

Age-friendly banking

With the closure of more than half of the UK's bank branches leaving hundreds of thousands of older people without access to basic banking services, Age UK has called upon the financial sector to implement ‘age-friendly' solutions

RIP to the ATM?

ATMs have been around for more than 50 years, and have spawned some memorable records in that time. There are two ATMs in Antarctica serving the science hub at the McMurdo station, and one in the Himalayas at 15,000 feet (capable of withstanding temperatures of minus 40 degrees Celsius). The ATM in the Vatican City gives instructions in Latin.

But the threat to ATMs is real and serious. Since 2000, cash withdrawals have doubled to over £2 billion annually. There is clearly continued demand for cash, and for those who want to or choose to use it, it’s getting more complicated and expensive to do so. Admittedly cash won’t go on forever, but it’s not right for the banks to be pushing us towards going cashless so enthusiastically at this stage.

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Last updated: Jul 28 2022

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