Liz Truss vows to protect right to use cash amid growth in contactless payments
Liz Truss has vowed to protect people’s right to use cash, as she suggested businesses should not only accept card payments.
The Foreign Secretary said that it was “important” people can still pay using notes and coins, as she was pressed on the cost of living crisis.
At a leadership hustings outside Belfast, she was asked by one Tory member what she would do to stop physical money from being phased out.
Ms Truss was pressed on reports that many people are returning to using cash as a way of balancing household budgets, given the cost of living crisis.
“It seems to me some businesses will only accept cash and some businesses will only accept cards,” she said.
“We should make sure people are able to use cash where they don’t have alternatives. I think that is important.”
In May, the Government announced legislation to ensure that local communities across Britain still have access to cash machines.
The law will place new obligations on banks and building societies to provide people with ways to physically withdraw their money.
It was passed by fellow leadership contender Rishi Sunak, the former chancellor, amid growing alarm at closures of high street branches.
Cash becomes increasingly rare
Cash is becoming an increasingly rare form of payment in the UK. It is forecast to fall to just nine per cent of transactions by 2028, but is still disproportionately used by some of the most vulnerable groups in society - particularly pensioners.
Debit cards first overtook physical money in 2017. The pandemic sped up the transition to contactless payments.
On Wednesday, banks warned that just one in every 20 transactions will be made using cash by 2031, as shoppers spend using plastic rather than notes and coins.
In 2010, 56 per cent of all payments were made using cash. That figure fell to 15 per cent last year, according to UK Finance, the banking trade body.
There were six billion cash payments made in 2021, down 1.7 per cent on the year before, as many restaurants, cafes and supermarkets started to refuse cash as a form of payment.
Debit cards were the most common payment method last year, followed by cash. Direct debits, standing orders and credit cards were the next most popular payment types.
During 2021, there were 23.1 million people in Britain who paid in cash only once a month or not at all.
This was a significant increase from 13.7 million people who shunned cash in the previous year. However, there are still 1.1 million people who use cash as their primary form of payment.
Adults who do not use online and mobile banking are nearly five times more likely to rely on cash to make all their payments, according to separate research by the City watchdog, the Financial Conduct Authority.
It said 4.5 million adults lack internet access and are likely to use cash frequently as a result.
Sian Williams, who leads work on financial inclusion at charity Toynbee Hall, said that until national digital coverage and access to data improves, “cash will remain as an essential financial inclusion tool for millions”.
Despite the continued demand for cash, it is becoming harder to access. According to ATM operator Notemachine, the number of cash machines in the UK that are free to use has fallen by more than a fifth, from 52,358 in 2018 to 40,830 today.
The cost of living crisis has highlighted the important role cash plays as a "budgeting tool", Ms Williams said.
“Cash is still the only way to pay which guarantees avoiding unintended debt," she said.
"When I use cash, I can see exactly how much I have spent and how much I have left, and I cannot accidentally overspend. Digital budgeting tools, including online banking and payment cards, still don’t compare to the certainty that cash provides.”
In this year’s Queen’s Speech, the government committed to legislating in order to protect access to cash. John Howells, chief executive of Link, a cash machine network, said the need for this legislation was now urgent.
“We need to make sure that for the five million people for whom cash is the most important payment method, they can continue to access it for free and be able to spend it on their high street,” he said.