Cash Acceptance

Margaret Ferrier Excerpts

Monday 20th March 2023 Westminster Hall

[Martyn Day (Linlithgow and East Falkirk) (SNP)]

I beg to move,

That this House has considered e-petitions 605030 and 622284, relating to the acceptance of cash.

It is genuinely a pleasure to serve under your chairmanship, Ms Bardell. The petitions before us attracted more than 58,500 signatures between them, having closed on 5 July 2022 and 10 March this year respectively. I thank the creators and signatories of the two petitions. Their actions have meant we are here today to debate an issue that is clearly of interest and concern to many people across the UK.

The petitioners call on the Government to:

“Make it illegal for retailers and services to decline cash payments”,

and to:

“Require all businesses and public services to accept cash payments”,

with the exception of internet-based businesses. They argue:

“Not everyone wants a digital trail and others simply cannot pay by card.”

The petitioners expressed concern about cashless payments creating an “enforced dependency on banks” and a

“threat to privacy as people cannot make anonymous payments.”

They stated:

“If we wish to uphold freedom of choice and the right to privacy, it is imperative that we protect the use of cash.”

[Margaret Ferrier (Rutherglen and Hamilton West) (Ind)]

In response to the Petitions Committee’s online survey, 61% of respondents said that they use cash to help with budgeting and, in the light of the cost of living crisis, by way of tracking their spending. Does my hon. Friend agree that the UK Government must recognise and protect cash as a tool that helps people to survive the cost of living crisis?

[Martyn Day]

My hon. Friend makes a good point. Indeed, I emphasise that it is essential not only for many people who budget, but for those on lower incomes, the elderly and those with disabilities, who need that facility the most.

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[Martyn Day]

The hon. Member makes a very good point on which I wholeheartedly agree. As I said, 6% of adults use cash payment for almost everything. That figure increases to 9% of those in the most vulnerable circumstances. I shall return later to the impact of cash refusal on the most vulnerable in our society.

Although the covid-19 pandemic undoubtedly affected payment habits, there has been both a sustained, albeit partial, recovery and a stabilisation in trends around the use of cash, as noted by the Bank of England in its third quarter bulletin in 2022. The Bank also noted that the value of bank notes in circulation remains close to an historic high, reflecting the fact that up to 60% of the population are holding more cash as a store of value.

Beyond freedom of choice, there are other clear benefits to using cash. One benefit for retailers is that unlike card schemes, for which they must pay set-up and transaction fees to providers, with cash every penny goes to them. Another benefit that should not be underestimated is the role that cash can play when other payment methods fail, as the hon. Member for East Londonderry (Mr Campbell) illustrated. I am sure that many of our constituents have had the experience of being unable to use online services or cards in the face of card rejection, IT glitches or system outages.

I can give an example from my own life, when I visited a friend who was recovering from surgery in hospital. I stopped for fuel on the way, which was lucky for me because although I had no cash in my pocket, my card was accepted, and when I got to their house I had an email from my bank telling me that it thought there had been a suspicious card transaction so my card had been stopped; had I tried to buy fuel on the way home, I would have had no means of paying for it. Cash is essential.

[Margaret Ferrier]

Figures show that 70% of people prefer to use cash because they are concerned about the privacy of alternative forms of payments, and 49% said they used cash because of concerns about fraud. Does my hon. Friend understand the worries that a move to a cashless society could militate against consumer privacy and may leave sectors of society more vulnerable to fraud?

[Martyn Day]

I agree entirely with my hon. Friend’s good points. It appears to be something that concerns very many people. Research from Which? has shown that 82% of Scottish consumers are likely to keep cash in case electronic payments are down.

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[Martyn Day]

Absolutely; the hon. Gentleman makes a good point, for which I thank him. I am flabbergasted that a bank is not dealing with cash—it beggars belief.

The issues raised need to be addressed, but protecting access to cash is not the same as protecting the right to use cash—a right that, for many, amounts to an absolute necessity. For some of our constituents, not being able to use cash is a profound barrier in everyday life. Cash can be a vital means of budgeting. As noted in the 2019 access to cash review, that is especially true for those on lower incomes. The 2022 cash census identified that there are cash users who are highly dependent on cash for budgeting and would struggle to swich to digital payments. It concluded that 15 million people in the UK use cash to budget. That is backed up by the responses to the Petitions Committee survey: 61% of respondents stated that they use cash to budget.

Earlier, I touched on the impact of cash refusal on vulnerable groups, to which I now return. The access to cash review drew a stark conclusion. It identified that more than 8 million adults in the UK

“would struggle to cope in a cashless society. For many people in the UK, using cash is not a matter of choice, but of necessity.”

It highlighted that

“poverty is the biggest indicator of cash dependency”.

Dependence on cash is closely tied to barriers to digital connectivity—for example, for those living in rural areas and those with low or no digital engagement.

In its 2022 policy briefing on the subject, Age Scotland raised the importance of cash for older people. It highlighted that many on low or fixed incomes prefer to use cash to budget. It also noted that

“140,000 adults in Scotland do not have bank accounts”,

and that

“34%...of over 60s in Scotland do not use the internet”.

Furthermore, a 2020 survey by the Financial Conduct Authority explored the relationship between cash usage and factors including education, health and wealth. It noted that 26% of those in poor health use cash to a great extent, and that some people with physical or cognitive disabilities find payment methods other than cash difficult to use.

[Margaret Ferrier]

My hon. Friend is generous to give way again. It has been reported that about 10% of people have been unable to pay for medical supplies with cash. We know that older people and those with some physical and mental health problems prefer using cash. Is my hon. Friend concerned that certain societal groups may be at risk of being unable to access the medical care they require if they cannot pay with cash?

[Martyn Day]

That is a valid concern that I hope the Minister will address when he responds to the debate.

Some 8% of respondents to the Petitions Committee survey said that they had a physical or mental health issue that made using alternatives to cash difficult. The issues included bipolar disorder, anxiety disorder, depression, arthritis, visual impairment, cognitive disability and strokes. It is reasonable to conclude, therefore, that the impact of cash refusal is felt acutely by those on lower incomes, those who experience barriers to digital payments, those who are disabled, and those with physical or mental health conditions. Indeed, the Government acknowledge that in their response, stating that they want to ensure that vulnerable people

“have appropriate access to banking”

and payment services.

However, to reiterate my earlier point, protecting access to banking and payment provisions, although important, does not address the issue of cash acceptance. There is growing evidence that cash refusal is becoming a very real issue. The covid-19 pandemic has undoubtedly accelerated the cashless trend. As Which? research has shown, the pandemic led to an increase in the number of retailers that refuse to accept cash. The cash census similarly found that as the economy reopened in the summer of 2020, retailers were increasingly going cashless, with 42% of people reporting that they had visited a shop that did not accept cash in July 2020.

The results of the Petitions Committee’s survey also make for stark reading: 77% of respondents said that a business had refused to let them purchase something with cash, with the most common refusals of cash coming from restaurants, takeaways and transport; and 88% said that cash refusal had a large or moderate impact on them, describing feelings of embarrassment or anxiety as a result.

Our daily lives are filled with examples of the cashless trend as the consumer experience becomes increasingly dominated by technology, from bus companies encouraging people to use contactless payments to card-only self-checkout machines in supermarkets. However, the march towards cashless risks the exclusion of a great many people and a profound and negative impact on their lives.

The Government’s current position of focusing on infrastructure but ultimately leaving the decision in respect of cash acceptance to individual businesses simply does not go far enough. It is essential that gaps in the provision of banking facilities are addressed so that people can access cash easily in their community and small business owners do not have to travel many miles to access deposit facilities. However, that alone does not guarantee cash acceptance. It is a difficult issue for many businesses, especially where the ability to deposit cash might involve lengthy journeys away from their business.

The Association of Convenience Stores advises that 60% of transactions in independent convenience stores are paid in cash, and that 99% of shops in its sector continue to accept cash, with retailers striving to give customers access to their preferred payment options. While supporting access to cash to facilitate financial inclusion, the ACS would rather the decision on what payment methods to accept be left to individual businesses and not mandated by the Government, whereas an overwhelming 98% of respondents to the Petitions Committee survey agreed with the petitioners that shops and services should be required to accept cash. This is clearly an issue that affects and concerns many of our constituents, customers and businesses alike. The Government need a plan to ensure that those dependent on cash are not left behind, and part of that must be about protecting their right to use cash.

The UK Cash Supply Alliance has called for businesses to be required by law to accept cash payments for in-person services equivalent to the maximum value of contactless transactions. In their response, the Government talk a lot about what is reasonable—“reasonable access”, “reasonable provision” and so on. Ensuring that individuals and businesses have easy and convenient access to banking facilities is not only reasonable but essential, and a requirement to accept cash for lower-value transactions is also reasonable. To have the certainty that when we walk into a shop or restaurant our cash will be accepted is reasonable and, for many, vital. The Government can and must act to protect access to cash, the ability to use that cash, and the ability of businesses to easily deposit that cash. Those are very much connected issues, and they must be equally addressed.

This is a complex issue, and I am aware that I have touched on a lot of different factors in a short space of time. Indeed, I could have touched on many other factors, but I look forward to comments from other Members. I have covered some factors in more detail than others, and I look forward to the Government’s response at the end of the debate.

[Duncan Baker (North Norfolk) (Con)]

I thank the hon. Member for Linlithgow and East Falkirk (Martyn Day) for such a good speech, and for hosting today’s debate. We are discussing a topic that I find greatly interesting. In a previous life—not many Members realise this—I was a businessman, but also a postmaster, or at least I had the legal title of a postmaster. As such, understanding retailing as I do, access to cash is an absolute necessity in all parts of society, particularly, as has been mentioned, in rural communities. It is therefore important that we discuss the thorny issue, which has already been touched on, of the wilful negligence of banks in closing their branches on our high streets up and down the country, despite all of the changing public behaviour, and the issue of traders accepting cash as payment.

Despite the advances of technology and those changing consumer behaviour patterns, it is clear to me that the acceptance of cash should remain an option for the foreseeable future. The country at large, and the public, are simply not in a position to close that door off. All the research that has ever been conducted in this area shows that people must be able to still access cash.

In 2021, I presented my own Banking Services (Post Offices) Bill. It did not get very far, but, nevertheless, the intention was to try to ensure that banks were required to offer banking services for their customers, including the provision of cash, via the post office network. The 11,500 post office branches on our high streets seemed like absolutely the right place to be the authorised financial services dealer to enable cash to always be accessed on our high streets.

[Margaret Ferrier]

Cambuslang, in my constituency, was honoured to host a bank hub, through the pilot scheme between post offices and the high street banks, to help protect community access to cash at a time when more and more banks were facing closure on local high streets. The hub on Cambuslang’s Main Street has been a great success and very popular with constituents. Does the hon. Member agree that more bank hubs could and should be funded for communities in need?

[Duncan Baker]

I thank the hon. Member for her question. Yes, bank hubs would be a very good idea. The Minister will probably correct me, but I believe that the Government have initiated putting bank hubs in throughout the country. However, my point about using the post office network is that it is already there. There are already 11,500 post offices on our high streets.

Instead of a sweetheart deal with banking services between the Post Office and the Government, we should legislate, and make it legally binding that post offices must always be allowed to offer banking services, so that we do not have some bank, at the drop of a hat, withdrawing its services because it does not like the deal that it is getting from the Post Office. We should set it in stone so that people and consumers always have that offering on the high street.

The European Central Bank found that cash remained the most frequent method of payment in 2022, at 59%. Despite that, and all of the research that we have outlined, we continue to see a steady decline of bank branches on our high streets. In 2021, 736 bank branches closed throughout the UK. From my constituency, I remember some of closures proposed by Barclays. The reason for closing was that the research indicated a drop in footfall. I said to the bank team that presented the findings, “We have had lockdown; consumers have not been able to go to the bank. You cannot possibly use a drop off in footfall as an excuse to shut a bank branch when the public have been prohibited from even accessing our towns and villages.” It was absolute madness.

In the east of England specifically, we saw a 39% decrease in the number of banks between 2012 and 2022. The far-reaching impacts that this has had, especially in areas where many older people live—I have the oldest demographic in the entire country—cause huge concern throughout my constituency and other rural areas, because all the research shows that the vulnerable and elderly are simply not able to go cashless at this moment in time.

I witnessed at first hand the serious impact of last year’s Barclays bank closure in my home town of Holt, where I was born, despite the fact that we are a centre for retail in the area. We have a huge number of visitors coming to Holt, and Barclays was the last bank in the town to close. Cue pandemonium for a retirement area with elderly people—a vibrant market town that is rich with many retail shops—who were left with no ability to do their banking, which affects not just residents and businesses but visitors, who also need access to cash. Luckily, we were able to use a banking hub, exactly as the hon. Member for Rutherglen and Hamilton West (Margaret Ferrier) suggested, to try to safeguard people needing access to cash.

The research suggests that 10 million people would struggle to cope in a cashless society. Many of them are on low incomes and are older, but they also include people who have disabilities or ill health and those who run small businesses—a plethora of people across society. By preserving the physical infrastructure, whether through a post office or a banking hub, we also preserve the right for the most vulnerable to use cash, to make sure that they too can be looked after.

I was a retailer at one stage, so I appreciate traders’ attitudes towards accepting cash, which can become expensive. The banks make it expensive and more difficult for people to do their banking. If banks shut, people have to use courier services, which charge, and there is a delay in deposits coming into the bank. I understand that it is far easier to stop using cash, but that does not mean that it is the right thing to do. Limiting the acceptance of cash payments puts pressure on people, who can become financially excluded. It may be very difficult for the Government to enforce the preservation of cash payments in a free market, but they should be straining every sinew to incentivise providers and make sure that they continue to accept cash.

The access to cash review provided some sensible and feasible recommendations to help keep cash payments an option for the foreseeable future, and I am sure the Minister will have looked at it. The crux of all this is that I recognise that, at some point—one day—cash will begin to fizzle out, but it is fundamental that we help consumers for as long as physically possible, because it is necessary. It is not about stifling technology or progression. It is a fundamental basic requirement that millions and millions of people up and down the country still need access to cash.

The use of cash will always play a vital role for many people—for budgeting and for people who may have poor spending habits, because it is a great way to help people manage their bills. Keeping cash as a viable option will help to support those on low incomes and vulnerable people, as well as our high streets and small businesses. I do not think that cash should be something that we begin to dismiss and wind down. The crux of this is about not only keeping cash in circulation, but making sure that the Government play their part in ensuring that there is a proper, viable infrastructure for cash to circulate, which means doing something to legislate for the banks, whose corporate social responsibility has gone out of the window as they have closed as many branches as they can around the country. That has to be something we address as well.

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[Patricia Gibson (North Ayrshire and Arran) (SNP)]

Let me begin by thanking my hon. Friend the Member for Linlithgow and East Falkirk (Martyn Day) for his excellent exposition of the challenges that we face. This e-petition debate calling for the legal right to use cash payments in shops and requiring all businesses and public services to accept cash payments is very important. Since I was first elected, repeated concerns have been expressed about the decline of our cash infrastructure and the need to preserve it. I have spoken in every single debate on this matter, along with the hon. Member for Blackpool North and Cleveleys (Paul Maynard), yet here we are again. It feels like we are banging our heads against a wall as we face, with increasing urgency, the existential crisis facing our cash infrastructure.

The arguments are well rehearsed, and have been again today. There is no denying that, as a result of changes wrought by the covid pandemic, the future of cash is even more uncertain. Many of us in this Chamber and beyond fear that its demise has been accelerated. Ultimately, this is a debate about inclusion—financial inclusion—and consumer choice. The situation becomes ever more urgent with every debate that we have on this issue and with each passing day. I wish to pay tribute to and commend the Scottish Affairs Committee for its report, which is a most informative and constructive contribution to the wider debate.

From the outset, it is important to underline the fact that the right to use cash, as the hon. Member for Blackpool North and Cleveleys said, cannot be separated from free access to cash. There is no point in legally ensuring the right to use cash if there is no reasonable access to cash. It is important to remember that, in Scotland, this debate takes place in the context of bank closures. This matters, because without access to cash it is simply not possible to use cash. That cannot be said too often. Fifty three per cent of Scotland’s bank branches have closed. In my constituency, the situation is nothing less than appalling. Kilbirnie has no bank. Beith has no bank. Dalry has no bank. West Kilbride has no bank. Kilwinning has no bank. Stevenston has no bank. Ardrossan has no bank. Indeed, in the whole of my constituency only Saltcoats, Largs and Isle of Arran have a bank branch. If we are to protect the cash infrastructure, we need a two-pronged approach: protecting access to cash and protecting the legal right to use cash.

Overall, Scotland has suffered the highest percentage loss of bank branches among all the nations in the UK. It is against that backdrop that any debate about access to cash and the use of cash must take place. Alongside this, we see our post offices under threat, as postmasters struggle to make even the minimum wage. In all the towns in my constituency, the post offices—those towns have no banks—play a vital role in supporting our cash infrastructure, because the banks have washed their hands of the matter. Yet, as an example, the town centre in Kilwinning has now lost its post office. Although Post Office Ltd is working hard to find a sub-postmaster to take on the franchise, it is proving very challenging because it is so hard to turn a profit or even make minimum wage for the franchisee. Of course, it is true to say that the last Labour Government closed down a whole slew of post offices, including many in my constituency, and stripped others of the services that they were able to deliver. All this has been exacerbated by the winding down of the energy support on which post offices currently rely.

Of course, it would help if the banks paid postmasters properly for the work they do on the banks’ behalf as they abandon our towns. Banks must value postmasters, who are picking up the pieces left behind by doing the banks’ work for them and for insufficient remuneration. The situation is simply unacceptable and has placed an unsustainable burden on postmasters, and I look forward to hearing the Minister’s thoughts on that specific matter.

As if all this was not enough, we see a worrying decline in cash machines, especially free-to-use cash machines, in communities across Scotland. This is especially so in rural areas, as we have heard. The Centre for Social Justice recently found that 38% of people on low incomes report having faced cash machine charges, compared with 17% of all consumers. That is what you call a poverty premium: the exploitative practice of placing a disproportionate number of pay-to-use cash machines in our most socioeconomically challenged communities.

Access to cash is vital if we are to demand, as we should and do, that there be a legal right to use cash, and there must be a requirement that all businesses and public services should accept cash. As we have heard, the vast majority of us use cash often and when it is convenient to do so. Indeed, for many rural dwellers, there may be little choice due to digital challenges, which may be exacerbated by the weather, as we have seen in recent weeks, as well as by technical glitches, which can strike without warning at any time. For the most vulnerable customers, there must be the option to access and use cash if that is what they require and is most convenient for them.

The Financial Conduct Authority has found that over 1 million adults in the UK do not have a bank account. There are also many who struggle to manage budgets electronically, and others who simply prefer to manage their daily transactions in cash, such as older people and those on a budget. They would face financial exclusion if our cash infrastructure is allowed to deteriorate further. We know that many consumers were unable to buy what they needed during covid, and that 38% were turned away when trying to buy food from shops using cash. What happens to those who have no alternative to cash payments? Are they to be abandoned? What happened to the customer being king?

Anyone who has ever faced any level of financial difficulty knows that, when this is the case, banks cancel credit cards and advice centres giving debt advice advise clients to cut their cards in half. They do that to help people control their spending and manage their budget better, because we know that using plastic can often lead to losing track and overspending.

[Margaret Ferrier]

Research has shown that carrying cash can help people with gambling issues to budget, avoid debt and better control their habits. By contrast, it is harder for people to retain control and keep track of their spending while using debit cards. Does the hon. Lady agree that the UK Government must ensure that cash remains a viable payment method to safeguard against the risks of gambling harm?

[Patricia Gibson]

Yes, and we expect gambling companies to step up and take greater responsibility for the harm that gambling outlets can cause. Of course, we know that there are more ways to gamble on high streets in socioeconomically deprived communities than in better-off communities, which is another scandal that we really should debate another day.

People actually handling cash and seeing in real time what money they are spending is critical to helping them budget—even more so when budgets are under so much pressure and are so much more precarious during this cost of living crisis, when everything costs more each time we go to the supermarket.

There is, of course, another side to this. Electronic payments incur a cost for firms, especially those making many small transactions. The UK Government should seek to address that to help to support our overall cash infrastructure. It is not right that businesses should have to pay those fees. While the provisions of the Financial Services and Markets Bill, which grants new powers to the Financial Conduct Authority over the UK’s largest banks and building societies to ensure that cash withdrawal and deposit facilities are available in communities across the country, were welcome, as many people have said in this debate, we need more detail. We need to know how that will work in practice. Again, I am hoping that the Minister will tell us more about that when he responds.

However, it is and has been clear for a long, long time—it was made even clearer as we tried to get back to normal after the pandemic—for a range of reasons that have been well rehearsed today and previously that consumers want and need the choice to pay for goods and services in cash. Consumers must not be forced down a cashless road which they do not want or are simply unable to go down. The Government should uphold that right and protect our cash infrastructure for all the sound reasons debated today. They should enshrine that right in legislation, which is becoming increasingly necessary.

Fundamental to all this is protecting free access to cash in all our communities. Financial inclusion matters, and the Government have a moral duty to uphold that in principle as well as in practice.