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Cash use could rise to help Brits budget as costs spiral

Paloma Kubiak
Written By:
Paloma Kubiak

Brits withdraw £1.5bn of cash from ATMs each week, and more people said they will rely on physical money to help them budget as the cost-of-living crisis intensifies.

Two years on from the onset of the pandemic, half of people said they are using less cash now than they were pre-Covid.

But with £1.5bn of cash withdrawn from ATMs every week, and given the rise in living costs, 8% of people said they are going to use more cash to help them budget and save.

According to a report on Covid’s effect on shoppers’ attitudes to cash, ATM transactions fell by as much as 65% across the UK at the onset of the pandemic.

This was due to lockdown restrictions which meant people were working from home, while essential retailers which remained open preferred digital payments.

The research from LINK – the UK’s main ATM cash network – revealed that by mid-summer 2020, 53% of people still said they had used cash in the past two weeks with 22% using it in a convenience store, 17% in a supermarket and 12% paid friends and family.

By Summer 2021, an increased 67% of people had used cash in the past two weeks.

And by the end of January 2022 when the government announced an end to Plan B measures in England, LINK found the number of people using cash in the last two weeks increased to 73%.

This was “the highest level LINK has recorded during the pandemic”.

Its research also showed a change in where people use cash. Cash payments are increasing in supermarkets, other retail, services like hairdressing and especially pubs.

LINK said this may be a result of those locations starting to accept cash once again, or at least not actively discouraging it. Locations which have shown very little change are convenience stores (by far the most popular location throughout), fuel, DIY stores and parking.

Comparing ATM use in January 2022 to a year ago, while they were 20% busier, this varied a lot across the network. Town centre ATMs were 50%-60% busier and airport ATMs around 200% busier but convenience stores barely changed, probably because people keep using them right through the pandemic.

‘A lot of people rely entirely on cash’

Graham Mott, director of strategy at LINK, said: “LINK’s view is that ATM use will never return to pre-pandemic levels and that people who perhaps were using less cash generally are now entirely comfortable using their phones or contactless.

“That being said, we’re still seeing £1.5bn withdrawn from ATMs every week. That’s still a lot of money and there are a lot of people who rely entirely on cash.

“Looking ahead, one new development and one we will be monitoring carefully, is that 8% of people say they are going to use more cash to budget and save because of rising living costs. We understand that people are far more comfortable using technology, but importantly, not everyone can use digital and perhaps there’s no better way to budget than notes and coins.”

Jenny Ross, Which? money editor, said: “While the pandemic has accelerated the shift to digital payments, millions of people still rely on cash to pay for everyday essentials and are not yet ready or able to make the switch. That is why it is vital for access to cash to be protected.

“It’s been two years since the government promised to legislate to safeguard access to cash, so it must move swiftly to ensure that consumers will continue to be able to access cash for as long as it is needed. We also want to see the FCA [regulator, Financial Conduct Authority] appointed as the key regulator to protect cash services.”