Cash crash?

One in three blocked from paying with notes and coins during pandemic

Which? is calling for urgent action to protect the millions of people who depend on the critically endangered cash network, as new research from the consumer champion shows more than a third of consumers have been blocked from paying with cash since the start of the pandemic.

In a survey of 2,000 people, 34 per cent reported being unable to pay with cash at least once when trying to buy something since March, when coronavirus restrictions were first introduced.

Respondents were most likely to be refused the option of paying in cash when shopping for groceries, which accounted for more than a quarter (28%) of incidents.

This was followed by leisure activities such as going to a pub or restaurant (24%) and buying cleaning products (21%).

In one particularly concerning incident reported to Which?, a diabetic man in urgent need of food because his blood sugar levels had dropped was refused service in two restaurants that had gone cashless because of coronavirus.

The figures are highly concerning given the significant numbers of people that still need cash to pay for essential goods and services, particularly now that the UK is once again under tough coronavirus measures.

Five per cent of respondents said they rely on cash, which equates to more than two and a half million people in the UK. 13 per cent, equivalent to seven million people, also said they would struggle without it.

Taken together, this means that 10 million people are not ready – or able – to give up cash.

Furthermore, 40 per cent, representing 22 million people, said that they viewed cash as an essential backup.

The survey also highlighted how rapidly the coronavirus outbreak has changed the way many people pay.

More than half (53%) of people said they had replaced some or all of their cash use since the first lockdown. Of these, just under half (46%) said that their declining cash use was as a result of shops prohibiting or discouraging it.

The potentially serious consequences of businesses refusing cash have been highlighted by the experience of consumers who have reported their problems to Which?.

In November, James Boswell, who is diabetic, stopped off at a service station in urgent need of food after getting stuck in traffic for several hours on the M25, which meant his blood sugar levels dropped.

Despite explaining his situation, the first food outlet he tried, a Nando’s restaurant, refused to serve him as he only had cash with him. The same happened at another restaurant, El Mexicana, but eventually he was able to pay in cash at KFC.

Which? also heard from Linda Blacker, from Southampton, who was unable to board a Bluestar bus after she attempted to pay with a banknote. This was despite having her foot in a brace on account of a broken ankle, and was on her way to see her GP to get a sick note at the time.

Meanwhile, two in five shoppers (42%) told Which? they were using less cash because they thought card payments were safer, a notion that prompted some businesses to encourage contactless payments or go entirely cash free in response to the pandemic.

This approach was first taken at the start of the pandemic, when there were mixed messages about the safety of cash, but since then the Bank of England has provided clarity on the issue.

It advised during the first lockdown that the risk from banknotes is ‘no greater than touching any other common surface, such as handrails doorknobs or credit cards’, and in November concluded that ‘any risk from handling cash should be low,’ particularly compared with ‘hightouch’ objects such as shopping baskets, self-checkout touchscreens or products for sale.

Given the low level of risk, combined with the significant number of people who still rely on it, Which? is encouraging shops to continue to accept cash to ensure that people, particularly those who are vulnerable, are not left in a position where they have no other way to pay.

The consumer champion is currently working with retailers to develop an initiative to protect consumers who want or need to continue shopping with cash.

Which? welcomes the government’s proposal for the FCA to be given the responsibility to oversee the protection of access to cash in the UK. However, the issue of acceptance must also be addressed.

The consumer champion is also calling on the government to make the regulator responsible for tracking the number of UK businesses accepting cash and at what rate this is changing, in order to determine what action is needed and when.

Failure to do so risks undermining legislation on protecting cash access announced by the government in last year’s budget, and the FCA and government need to work together to ensure cash remains a viable payment option.

Jenny Ross, Which? Money editor, said: “Cash is still a vital way to pay for millions of consumers, so to see such a high proportion of people report that they have had difficulty spending it is very concerning, particularly now we have entered another lockdown.

“We have repeatedly warned about the consequences that coronavirus will have on what was an already fragile cash system, but nowhere near enough action has been taken by the government or the regulator to understand the scale of this issue.

“The government, which is still yet to introduce legislation to protect cash it promised almost a year ago, must urgently make the FCA responsible for tracking cash acceptance levels. Failure to do so will see the cash network crumble and leave millions of people abandoned.”