Make accepting cash more affordable for charities, review says

The Access to Cash Review warns that as the use of cards and digital payments increases charities are facing rising costs to process cash

The report
The report

The government should introduce measures to make it more affordable for charities and small businesses to continue accepting cash, an independent review has concluded.

The Access to Cash Review, published this week, warns that charities and small businesses are facing higher costs to process cash as more people turn to using only card and digital payments and bank branches close.

If current trends continue, the report says, the UK is on track to stop using cash completely by 2026. Although the report’s authors do not think this will happen, they warn that cash could account for only one in 10 transactions by then.

Charities have in recent years expressed concern about the effect that cash disappearing would have on donations, particularly bucket collections.

Last year, the Institute of Fundraising warned that charities would need time to adapt to the diminishing role of cash and said the transition must be carefully managed to avoid cash donations falling off a "cliff edge". 

This week’s report says that about 17 per cent of the population would struggle to cope in a cashless society.

The report says it’s important to ensure people continue to have access to cash through ATMs or cashback in shops, but adds that ensuring vendors can still afford to accept cash is just as vital.

"As cash is used less, the infrastructure to support it is scaling back," the report says.

"This is leaving small businesses and charities with higher costs to handle cash and leading many to consider dropping it altogether."

These costs – which include depositing cash at the bank, travel to the bank, paying staff to cash up and insurance – are rising, the report says.

"As cash use has gone down, the unit costs of cash handling have gone up for banks, and many of these costs have been passed on," the report says.

"As bank branches have closed, journey times have risen, along with staff costs and fuel costs. This has led many merchants to hold cash for longer, raising insurance costs."

The report calls for the introduction of ATMs that accept cash deposits as well as giving money out, making depositing money easier and cheaper for charities and small businesses.

"We recommend a programme of new work and targeted technological innovation to take this forward (such as deposit-taking ATMs and ‘smart safes’), led by government and regulators," it says.

The report says almost three-quarters (74 per cent) of people are concerned that charities and homeless people would suffer if Britain went completely cashless and people no longer carried change.

It says technological innovation could be the answer to this problem, suggesting digital payment devices might provide a solution.

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