UK risks 'sleepwalking into crisis' as cashless society shuts out more and more vulnerable people

“CARD ONLY. NO CASH ACCEPTED,” a sign reads on the shop door. Most of us walk in without a second thought – we don’t carry cash anyway. But for some people, particularly vulnerable people, this cashless space shuts them out. It is another place they are made to feel unwelcome.

People facing homelessness and poverty, people with learning disabilities, domestic violence victims, the elderly and young people are among those most at risk of being left behind in this increasingly cashless society, according to a recent report from MPs in the Treasury Committee.

It warns that the UK is in danger of “sleepwalking into a situation where cash is no longer widely accepted” unless the Treasury acts to investigate this and ensure more businesses offer alternative payment options.

“The government is in the dark on how widely cash is being accepted and that is completely unsustainable,” says committee chair Dame Meg Hillier. “We are at risk of a two-tier society where the most vulnerable bear the brunt and this needs to be a wakeup call.”

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The committee sought to “give voice to those groups which are at severe risk of not being heard”, pointing out that a “sizeable minority depend on being able to use cash and must not be forgotten”.

More than one million people in the UK do not have a bank account, according to the Financial Conduct Authority (FCA). 

Elderly people, especially those over 75, frequently fall into this category – but the FCA found that young people aged between 18 and 24 are the most likely to be unbanked.

Ellie McLaughlin, senior policy and advocacy manager at Positive Money, explains this is likely due to “increasingly fragile finances of young people, who may be denied access to services due to insecurity of work and income, and a lack of credit history to draw upon”. 

“Not only are younger demographic hit by generational wealth and housing inequality, but these injustices are having knock-on effects on their ability to access banking services that are essential in a modern economy,” McLaughlin says.

Elderly people remain at risk too. Age UK previously found that one in three elderly people are “uncomfortable” with banking online. 

Caroline Abrahams, charity director, says “many older people view cash as the most reliable and straightforward way to pay for goods and services, as well as an effective means of managing their weekly budget when money is tight”.  

“For others, having notes and coins in their purse or wallet helps them to stay independent and retain firm control of their finances, while also lowering their risk of being scammed,” she adds.

Victims of economic abuse are also among those who often rely on cash. As the Big Issue previously reported, perpetrators may restrict their victims’ access to bank accounts, leaving them without financial means to escape and more likely to be facing debt. Cash can give survivors independence.

Homelessness and anti-poverty organisations have similarly raised fears around cashlessness. The Big Issue has had to adjust quickly to an increasingly cashless society, with many vendors now accepting card payments.

London seller Matthew Campbell recalled being given a phone which enabled him to accept cashless payments, saying: “I was like: ‘Wow!’ I’d been missing out on sales all this time. So, I went up to the office and the team showed me the gizmo. And yeah, I’ve never looked back.” 

But some Big Issue vendors “still face barriers” to cashlessness and sales are “inevitably impacted”. 

Catherine Parsons, managing director of Big Issue Changing Lives, explains: “We’re actively supporting our vendors to adopt card and contactless payment options, providing them with training, devices and data to adapt to our increasingly cashless society. This digital transition has boosted sales for many vendors and helped them stay connected to customers.

“However, we recognise that some of our vendors still face barriers including limited digital literacy, banking access and fees for many cashless providers, leading them to opt not to take up our offer of support. As society becomes increasingly cashless, these vendors’ sales will inevitably be impacted. It’s important no one is left behind as the world evolves, and we encourage the government to do more to encourage cash acceptance in society – otherwise it will be the most vulnerable bearing the cost.”

People with mental health conditions are identified in the report as another group at risk of being left behind. Conor D’Arcy, the deputy chief executive of Money and Mental Health, explains that there are symptoms of certain mental illnesses which make it more difficult to engage with cashlessness.

This includes impulsivity, often associated with bipolar disorder, and using cash “makes it easier to stay in control”. It also helps people budget, vital for those “who may be struggling to get out of bed, make food or do the basics of everyday life because of their mental health”. 

Beyond that, people with mental health problems are three times more likely to fall victim to an online scam, and using cash offers some protection from this.

Positive strides are being made, such as banking hubs to improve access to cash and government schemes to improve digital inclusion, but D’Arcy says he is particularly concerned about the pace at which society is becoming cashless and how this could exacerbate mental health conditions. Cash was used for more than half of all payments in 2013, but this fell to 12% by 2023, UK Finance has found.

“If this continues without really making sure that people who rely on cash can still get it and have it accepted, you risk cutting off people more from everyday life and essential services,” he adds. “And from a bigger picture government point of view, if there are consumers who are being cut off from spending money in a way that suits them, then that’s not great for growth either.”

There are also concerns for people with learning disabilities. Mencap warns that online payments are often “inaccessible” and that many people with a learning disability “rely on cash to be financially independent and help with budgeting”. 

“Everyone with a learning disability is different, so for others, more innovative ways to pay – for example, using prepaid cards – may be helpful,” says Jackie O’Sullivan, Mencap’s executive director of strategy.

“It’s crucial businesses and the financial industry recognise people with a learning disability as valuable customers and support them by making reasonable adjustments, allowing people to choose the method of payment that meets their needs and giving them the tools to navigate changes.”

A Treasury spokesperson says: “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.”

Although it has no plans to regulate cash acceptance, the Treasury has welcomed businesses who want to continue accepting cash and new rules from the Financial Conduct Authority to protect access to cash and the ability to deposit it. 

But the Treasury committee wants the government to go further, with annual reports carried out on the extent of cash acceptance to understand the extent to which vulnerable groups are being shut out. 

It warns that “there may come in the future where it becomes necessary [for the government] to mandate cash acceptance if appropriate safeguards have not been implemented for those who need physical cash”.

Hillier says: “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.”

Abrahams adds that the government must avoid “sleepwalking into a crisis”, adding: “If people can’t use cash then the system will break down. Protecting cash acceptance needs to be seen as a real priority.”

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