10 Million Brits Would Struggle in a Cashless Society

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March 2022
10 Million Brits Would Struggle in a Cashless Society (1)

10 Million Brits Would Struggle in a Cashless Society

A shift entirely away from cash and towards digital banking would leave more than 10 million people struggling to cope and feeling like they've lost control of their finances, a new report warns.

While just 17% of transactions were made with cash in 2020, millions are reliant on coins and notes and could be financially disenfranchised in the coming years, a report from the Royal Society of Arts (RSA) and ATM network LINK found.

“For millions of people, their relationship with cash is critical to the way they manage their weekly budget," said Mark Hall, author of the report The Cash Census.

While the pandemic prompted more people to use digital banking services and shop online, the portion of people who say they’d feel left behind in a cashless society is virtually unchanged from 2019, the study found. 10 million people (19%) continue to say they’d struggle to cope in a cashless society. Another 15 million (29%) said they could manage to live without cash but it would be a major inconvenience.

Those reliant on cash are disproportionately older (one in three are over 65) and living in low-income areas.

For 15 million people, cash is useful for budgeting. They either take out an amount of cash and try to make it last, set aside the amount they need for a period of time, or divide the amount they will spend in different areas - tactics that have grown in importance as the cost of living has risen. 

Without these budgeting tools, people fear falling into debt or losing control of their finances.

“It’s vital that the dash to digital doesn’t disenfranchise anyone, especially with the cost-of-living crisis putting such significant strain on family finances right now,” Hall said.

Additionally, two-thirds of the population are concerned about fraud when making digital payments. 57% also worry about privacy with debit and credit card payments, while millions more don’t feel equipped to use technology like their bank’s smartphone apps.

Overall 23 million people said using cash made them feel in better control of their finances.

Rural and remote communities have also raised concerns that their poor broadband and mobile connectivity will make it harder for them to access digital banking services. 

In sum, the loss of all cash would lead to “anxiety, economic exclusion, isolation, exploitation, debt, rising costs, and major concerns over privacy, security, and control,” the report from the RSA and LINK concluded.

While bank branches have dwindled, with nearly half closing their doors since 2015, and cash machines are also disappearing, with numbers down a quarter since January 2018, there have been important steps taken to safeguard access to cash, the report said. Shared banking hubs have been launched, allowing customers of all major banks to access basic banking services in one location, and the Post Office continues to offer banking services at 11,500 locations.

LINK continues to run the Financial Inclusion programme, providing financial subsidies to operators providing free cash machines in the most deprived areas of the UK. This has protected more than 3,000 free ATMs across the country.

Meanwhile, a legislative change has allowed customers to withdraw cash at newsagents and corner shops without making a purchase.

Sources