Payments – Access to cash

In recent years, there has been an ongoing trend in payments away from cash and towards card and other digital payments methods. This trend is expected to continue with ongoing innovations in payments, and more choice for users in how they transact.

Cash usage has fallen from 56% of all payments in 2009 to 17% in 2020 (UK Finance, 2021). Prior to the pandemic, cash use was decreasing by around 15% every year, but in 2020 it decreased by 35%

Payment volumes (millions) from 2010 to 2020 (UK Finance, 2021).

During 2020, there were 13.7 million consumers who used cash only once a month or not at all, and instead relied on card or other payments. This was a significant increase from 7.4 million the previous year (UK Finance, 2021).

The decline of cash has been attributed to three key factors for consumers:

  • Increase in the use of contactless payments (via both cards and mobile phones)
  • Increase in the upper limit for contactless to £45 
  • Lockdown government guidance on staying safe by using contactless

And these factors for businesses:

  • Cheaper access to card readers for businesses 
  • Making Tax Digital – which makes it easier for businesses to get their tax right and keep on top of their affairs

However, cash is still the second most common form of payment, and is relied on by the most vulnerable people, such as the elderly and low-income households. 

In February 2020, 5.4 million adults (10%) relied on cash for all or most of their daily purchases (FCA, 2021).

Why do people use cash?

  • More reliable – keep it in case of IT failures
  • More secure – people do not trust digital payment security
  • Privacy – digital payments leave a record that can be traced back to individuals

Why do businesses use cash?

Businesses face relatively few barriers to accepting cashless payments or increasing the amount of cashless transactions they accept. The main barrier was customer preference for using cash, rather than technical or cost implications. 

Cash payments had the lowest direct fees associated with them in comparison with other payment methods, and many businesses said there were no direct costs associated with cash payments at all (HMRC, 2021).

Among small businesses that provided ongoing direct costs for the payment methods that they accepted, the highest mean costs were for online bank transfers at £8,471 per annum. The lowest mean direct costs were for cash payments at £676 per annum (HMRC, 2021). 

  • 44% of respondents said security is a top factor when considering what payment method to use
  • Most businesses weren’t aware of the difference in cost between payment methods (FCA, 2021)

Businesses such as market stalls still rely on cash heavily, so for these traders, access to cash is crucial. 

What are the main issues that affect access to cash?

  • Cash desserts – where the cost of running an ATM is more than the money made by interchange fees, meaning they close down. Although banks and building societies run their own ATMs, independent ATM deployers may exit the market.
  • Cash infrastructure fails – a small number of entities run the wholesale cash network and transport cash to its final destination. As demand for cash falls, and the provision to hold it declines, the cost of processing cash becomes more expensive. If the market absorbs the extra costs, then one of the operators could exit the market, severely affecting the capacity of the market overall. But if consumers absorb this cost, they will use cash less.

Response so far:

The government’s main response is to support digital payments while safeguarding cash for those who need it. The government has allocated oversight to the Financial Conduct Authority (FCA) and Public Sector Resourcing (PSR); however, these are not decision-making bodies.


Currently, no single authority has overall responsibility for overseeing the maintenance of a well-functioning cash system.



2019: Research from Public Sector Resourcing (PSR) indicates that only 54% of small businesses accept cash.

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About the Author

Christina Onyuta is a Policy Analyst at Trade Finance Global.

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