The independent Access to Cash Review said ATM and bank closures were “just the tip of the iceberg” and warned against leaving access to cash to market forces.

The review said the government, regulators and banks must act to ensure cash remains viable for as long as people need it.

Cash is only used for three in every 10 transactions, down from six in 10 a decade ago, and is forecast to fall to as low as one in 10 transactions within the next 15 years.

However, the review found digital payments don’t work for everyone: it is estimated that around eight million adults – 17% of the population – would struggle to cope in a cashless society.

But people getting hold of cash isn’t the only problem. There are also concerns about shops being able to accept cash.

The report said the shift away from cash towards digital payments is placing a strain on the UK’s cash infrastructure, which currently costs around £5bn a year to run.

It warned the economics of handling and accepting cash will lead to more retailers going cashless.

Natalie Ceeney, independent chair of the Access to Cash Review, said: “There are worrying signs that our cash system is falling apart. ATM and bank branch closures are just the tip of the iceberg, underneath there is a huge infrastructure which is becoming increasingly unviable as cash use declines.

“If we sleepwalk into a cashless society, millions will be left behind. We need to guarantee people’s right to access cash and ensure that they can still spend it.”

What can be done?

The review said innovation is key to protecting access to cash. It suggests:
– Guaranteeing access to cash for consumers not just via ATMs but by local shops offering cashback.
– Letting small businesses deposit their cash in lockers of ‘smart ATMs’ rather than having to make a weekly trip to their bank branch.
– Creating a more efficient, effective and resilient wholesale cash infrastructure.

Consumer group Which? thinks the UK needs a standalone regulator to deal with the issue.

Gareth Shaw, head of money at Which?, said: “We have been warning for years of the risk of Britain drifting towards a society where millions of people who rely on cash face being cut off – so this review’s recognition that the system is on the brink of collapse should be an urgent wake-up call.

“With our vulnerable digital banking systems currently being hit by more than one IT failure every day, we believe the government should go a step further and appoint a single regulator with a statutory duty to protect access to cash and build a sustainable cash infrastructure for the UK.”