Millions risk being left behind, report says

Millions of people in the United Kingdom risk being left behind if the country "sleepwalks" into becoming a cashless society, a major report has warned.

Cash machine network Link funded an independent study called the Access to Cash Review, led by the former head of the Financial Ombudsman Service Natalie Ceeney, and featuring several major consumer groups.

It warned that the UK's cashflow system was "on the verge of collapsing" and called upon financial regulators and banks to take urgent action. Otherwise, Ceeney said, as many as 17 percent of the UK's population – more than 8 million adults – would be left "struggling to cope". It also highlighted poverty, rather than age, as being a factor in why some people continued to favor cash payments.

Closures to bank branches and ATMs have coincided with people increasingly choosing debit card payments over notes and coins, with debit payments overtaking cash for the first time last year.

Within 15 years, the review said, cash could fall to as low as just 10 percent of all transactions.

The annual cost of maintaining the UK cash network, from cash-counting to ATMs, is around five billion pounds ($6.5 billion), largely funded by the banking sector through charges from customers.

But if cash becomes less economically viable, retailers may start to move away from it, and falling income and fixed costs would combine to create what the review called "a cash infrastructure which is fast becoming unsustainable".

"Some of these companies may consider exiting the market as its profitability declines – leading to the risk of disorderly collapse," the review continued.

While e-payment is extremely common in China, and parts of Europe such as Scandinavia are increasingly cashless, the review warned that in the UK, around 2.2 million people still used cash for all their regular day-to-day business, and the country is not ready for a cashless society.

"There are worrying signs that our cash system is falling apart," it said. "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."

With cash machines closing across the country at a rate of around 300 per month, and the amount of money being withdrawn from those that remain falling at a steady rate, conditions are lining up in a way that would cause significant problems for those millions of habitual cash users.

Nicky Morgan MP, chair of the Commons Treasury committee reacted to the report by saying that "the simple truth is that leaving the future of cash to be determined by market forces will not work."

The Labour Party's shadow economic secretary to the Treasury, Jonathan Reynolds, welcomed the report's findings, and called on the Treasury to study its recommendations.