Firms may need to be forced to accept cash to prevent two tier society

Businesses may need to be forced to accept coins and banknotes, to make sure the UK does not drift into a loss of cash acceptance for those who rely on it, the Treasury Committee has warned.

The committee said cash usage has decreased significantly across the UK and it is urging the Government to undertake a “vastly improved” monitoring and reporting of cash acceptance levels.

Not doing so could risk creating a two-tier society, where vulnerable groups become excluded from community spaces such as leisure centres, theatres and public transport, it added.

The committee said it has heard from those representing vulnerable sectors of society, including people with learning disabilities, domestic abuse victims and the elderly, that buying essential goods and services can cost more, as the number of places where they can spend coins and banknotes shrinks.

It added that, having heard evidence on the impact of declining cash acceptance on vulnerable communities, MPs believe there may be a time in the future when it becomes necessary for the Treasury to mandate cash acceptance, if those who rely on physical cash are not adequately supported.

The report said: “There may come a time in the future where it becomes necessary for HM Treasury to mandate cash acceptance if appropriate safeguards have not been implemented for those who need physical cash, and the level of cash acceptance begins to lead to widespread detriment.

“To ensure that HM Treasury has the information it needs to make this decision, cash acceptance levels in the UK must be monitored to ensure we do not sleepwalk into a loss of cash acceptance for those who need it.

“HM Treasury must provide the Treasury Committee with annual reporting on cash acceptance levels and provide an analysis of HM Treasury’s view of the tolerable level of cash acceptance in society.”

The committee said witnesses had highlighted public transport and infrastructure for motorists as areas where cash acceptance has become less common.

It continued: “Many witnesses identified the problem of car parks having removed the ability to pay by physical cash.”

Charities and consumers also told the committee that local government and local government-funded services are increasingly cashless.

UK businesses and organisations could choose not to accept cash – with no legal duty to accommodate customers’ varying needs – the report warned.

It added: “For people who do not have bank accounts, who are sometimes referred to as the ‘unbanked’, being able to spend physical cash is vital.”

The committee also heard that people with learning disabilities were more likely to need to rely on cash and could be severely impacted by cash being refused as a form of payment.

Survivors of economic abuse meanwhile may rely on cash to get by and to escape their abusers.

In January, Economic secretary to the Treasury Emma Reynolds told a Treasury Committee hearing: “We have no plans to regulate businesses to compel them to accept cash – big or small.”

When it was put to her that certain marginalised people could be excluded, she said: “I think our solution to that, through the financial inclusion work that we’re doing, is to try to tackle digital exclusion.”

The report also highlighted the national resilience benefits of maintaining the ability to spend physical cash, particularly in relation to recent bank outages, which MPs were told led to a surge in cash withdrawals.

It said that Ross Borkett, banking director at the Post Office, identified “a big increase in cash withdrawals on days where there is an outage of some form with a payments system”.

Following an IT failure at Barclays, the committee wrote to major retail banks in the UK to gather more information on the frequency and length of IT failures.

The letters received from banks indicated at least 158 banking IT outages between January 2023 and February 2025.

It also said the lack of consistent evidence makes it difficult for anyone, including the Treasury, to determine the state of cash acceptance in the UK.

Data from cash access and ATM network Link in 2024 indicated that half of people had been somewhere that did not accept cash or discouraged cash usage in the previous eight weeks.

Committee chairwoman Dame Meg Hillier said: “The Government is in the dark on how widely cash is being accepted and that is completely unsustainable. We are at risk of a two-tier society where the most vulnerable bear the brunt and this needs to be a wake-up call.

“Our committee has sought to give a voice to those groups which are at severe risk of not being heard by Government policymakers. A sizeable minority depend on being able to use cash and they must not be forgotten by Whitehall.

“As a society, we must avoid sleepwalking into a situation where cash is no longer widely accepted. This is the beginning, not the end, of our scrutiny of this issue. The Government needs to take this seriously.”

UK Finance has highlighted a significant decline in the use of cash as a form of payment, the report said. Cash was used for 51% of all payments in 2013, but by 2023 this had fallen to 12%.

The Financial Conduct Authority (FCA) requires banks and building societies designated by the Government to assess and fill gaps, or potential gaps in cash access provision that significantly impact consumers and businesses.

The access to cash regulations apply to 14 banks and building societies designated by the Treasury, with Link designated as scheme operator.

If a gap in cash access services is identified, additional services may need to be provided, such as a banking hub or an ATM.

A milestone was recently reached in the provision of banking hubs, with 150 having been opened.

John Howells, chief executive of Link, said: “This timely report is further evidence that cash continues to be absolutely critical. Critical for the millions of people who rely on it day in, day out, and critical for national security and resilience.”

Sam Smethers, chief executive of charity Surviving Economic Abuse, said: “Abusers control survivors’ bank accounts or prevent them from opening one to control and trap them. This forces many to secretly save cash or flee with only the clothes on their backs and change in their pockets.”

A Treasury spokesperson said: “Cash continues to be used by millions of people across the UK and we are working with the banks to roll out 350 hubs by the end of this Parliament so that people and businesses in areas that have lost local bank branches still have access to it.

“We welcome businesses who do want to continue accepting cash and new rules introduced by the Financial Conduct Authority support this by helping them to make deposits.”

Conor D’Arcy, deputy chief executive of Martin Lewis’s charity the Money and Mental Health Policy Institute, who gave evidence to the inquiry, said: “For many of us with mental health problems, cash is hugely important in our day-to-day lives.

“It helps people to budget, stay in control of their spending or to get support from a family member or friend to manage money.

“As we move towards an increasingly digital society, it’s vital that we protect the use and acceptance of cash for those who rely on it, and we welcome the Treasury Select Committee’s call for the Government to prioritise this issue.”

Published: 30/04/2025 by Radio NewsHub