Cash Rules in the United Kingdom

Cash still rules in the United Kingdom and efforts to dethrone it will harm local economies, according to a recent UK government think-tank study.
Cash Rules in the United Kingdom
Localis – an independent government think-tank based in London – has published the results of recent research that addresses the role cash plays today in the UK, cash access in communities and what cash’s future may hold.
Localis was commissioned by Cardtronics Europe to conduct the study, which included surveying more than 100 key local government leaders, chief executives, cabinet members and chief finance officers.
In addition to determining that cash access is very important for local economies and communities, the report concluded that:
  • ATMs are where the vast majority of cash withdrawals are done
  • Cash is still used for the majority of retail payments
  • High streets are particularly reliant on cash
  • Demand for cash is significant, particularly from the 1.6 million Brits who are more dependent on cash than the general population
  • Growing use of online banking tools has caused an increase in closures of bank branches and removal of ATMs – leaving towns with no cash access

Survey Says...

The results of Localis’ survey of local government stakeholders were that a staggering 97 percent think that cash is at least moderately important and 80 percent think it is important or very important to the economic vitality of their high streets and other shopping areas.
In addition, a third of respondents said that the reduction in the number of high street bank branches has created cash accessibility problems locally.
More importantly, more than 25 percent of the respondents said that local businesses had raised concerns with them about lack of access to cash in their communities. Of those concerns:
  • 85 percent were linked to closure of bank branches
  • 50 percent were linked to high transaction costs for non-cash payments and the pressure to offer more non-cash payment methods
  • 30 percent were linked to a reduction in the number of ATMs
Three quarters of respondents said that local economic growth would suffer if access to cash was reduced in their area.
These findings and comments underline the continued importance of cash, which is still used for the majority of retail payments, with 50 percent of retailers relying heavily on cash payments.
The Localis report also cited data from the Payments Council about the 1.6 million people in the UK who rely more heavily on cash than their fellow citizens. More than 60 percent of these individuals are “unbanked” and tend to come from disadvantaged backgrounds or are older. Losing access to cash will negatively impact many of these people because they find it easier to budget using cash than with other payment methods.
Localis says that increased use of online banking caused the rate of bank branch closures in 2015 to reach 650 – that’s a dozen per week! This trend has been particularly hard on rural communities that have been left without a single branch. However, companies such as Cardtronics UK have helped fill the void left when bank branches close by partnering with the government officials and high street banks as it did earlier this year in Glastonbury, UK.
What about the survivability of cash? On one hand, increased use of newer forms of payment and other factors portend that the volume of cash payments in the UK will fall 25 percent – from 18 billion in 2015 to13 billion in 2023. However, the value of cash payments is expected to remain stable – only decreasing by 5 percent from £257 billion in 2015 to £245 billion in 2024.
The final conclusion? For the foreseeable future in the UK, the demand for cash is likely to remain high and the value of cash used will change relatively little.
Jonathan Simpson-Dent
Managing Director, Cardtronics Europe

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