Ten million UK adults say they would struggle in a cashless society

New research published today by The RSA, shows how a sudden shift to a cashless society would leave millions without the capabilities to engage in a digital economy and the control many have over managing their finances.

‘The cash census: Britain’s relationship with cash and digital payments’ is the most comprehensive and up to date report since the independent Access to Cash Review concluded in 2019 that the UK was not ready to go cashless. The new research highlights that while a significant number of people rarely use cash and embrace a digital future, almost half the population (48%) say a cashless society would be problematic highlighting concerns around the ability to control finances and debt, digital fraud, privacy and increased isolation. The research was funded by LINK, the UK’s Cash Access and ATM Network.

While cash use has been declining for over 15 years with people increasingly choosing alternatives including contactless cards and mobile payments, the shift towards digital was turbocharged throughout the Covid-19 pandemic. During this time, the UK saw a significant fall in ATM withdrawals and cash use as businesses encouraged non-cash payments, traditionally ‘high cash use’ sectors such as pubs and restaurants temporarily closed and many customers choosing to shop online or becoming more comfortable to use alternatives to cash.

However, while ATM use will never return to pre-pandemic levels, the research shows the percentage of the population wholly reliant on cash is unchanged. In fact, one in five people, equating to 10 million people said they would struggle in a cashless society, mirroring similar numbers from the Access to Cash Review.

For the first time, the research has segmented the UK adult population into five groups based upon attitudes and behaviours around cash and digital payments. These include:

• Cash dependents: An older segment that have a strong preference for cash. (10 million adults)
• Cash keepers: A younger segment that like the security of having cash (12m)
• Cashless sceptics: The oldest segment whose scepticism about a cashless society runs deep. (12m)
• Cash occasionals: A younger segment that prefer to manage their money digitally but use cash occasionally or in emergencies. (9m)
• Cashless converts: A segment that strongly prefers digital payments and don’t see many benefits to cash. (11m)

The research suggests that the majority of customers who are increasingly going cashless and embracing digital were doing so already. The pandemic has only sped up this process. For many cash dependents, cash keepers and cashless sceptics, there is still a strong attachment to cash and one in seven of the population (8 million people) was using cash more because of the pandemic.

Cash remains especially vital for those on low incomes and is used by 15 million people to budget. During the pandemic, the three parliamentary constituencies that saw the smallest reduction in ATM uses (Liverpool Walton, Bradford South and Birmingham Hodge Hill) are among the highest areas of deprivation across the UK. Cash also plays an important part for many groups, especially the elderly, who are more likely to visit bank branches and post offices in person as an important way to connect to their community. Cash users in rural and remote locations are concerned that poor broadband and mobile connectivity will make it harder for them to go fully digital.

The research shows that for some there are still huge barriers using digital payments and that while there are many digital tools available, they simply do not work for some people. This includes concerns that forcing people on to digital can lead to a loss of control over their finances risking spiraling debts.

Overall, 23 million people say that using cash makes them feel more in control of their finances. This finding may reflect wider concerns about fraud and using technology with almost two-thirds (64%) concerned about fraud when making payments and 57% concerned about privacy.

As part of its recommendations, the report puts forward several policy suggestions. These include:

1. The urgent need to introduce legislation, overseen by the Financial Conduct Authority (FCA) to ensure everyone can continue to access cash near to where they work and live and to protect the commercial cash system.
2. Encouraging further innovation in SME cash deposits to ensure it remains viable for businesses to accept cash.
3. Essential government services (both local and national) such as school dinners, council tax and utilities should ensure people wishing to pay by cash can do so.
4. Digital education needs to advance so all young people develop skills to manage their money digitally. The financial services industry can play a critical role here by working in partnership with charities.
5. The government must increase the speed of its national broadband and 4/5G roll out ensuring no region is left behind. The internet should be recognised as an essential utility and clearer rules should be established to protect people from being disconnected.

Mark Hall from the RSA, and the author of the report: “For millions of people, their relationship with cash is critical to the way they manage their weekly budget. Despite online banking and shopping becoming more common, our research shows the percentage of the population wholly reliant on cash is unchanged in the past three years. It’s vital that the dash to digital doesn’t disenfranchise anyone, especially with the cost-of-living crisis putting such significant strain on family finances right now.”

John Howells, CEO, LINK: “People are increasingly using less cash and embracing contactless and digital payments. However, it’s clear that digital does not currently work for everyone and for those living on tight budgets, where every penny counts, there is no better alternative to notes and coins, and they are in no rush to turn to money management tools. We are pleased to see that the Government has committed to introduce legislation to protect access to cash, but it’s vital we have this now.”

Natalie Ceeney OBE, Independent Chair, Access to Cash Review: “It’s three years since we published the final recommendations of the Access to Cash Review and despite the pandemic, the need for cash has not gone away. The Community Access to Cash Pilots really brought home how important cash is for people living on lower incomes and how disruptive it is for ordinary consumers or businesses if an ATM or bank branch closes. The question we asked three years ago was whether the UK is ready to go cashless? The answer is still no.”

Notes to editors

Spokespeople and case studies available upon request.

Methodology: We worked with market research and insight agency Opinium to design a nationally representative survey of 3,003 people to better understand attitudes and behaviours around cash, digital payments and engagement with financial institutions. The survey was sent to 2,504 members of Opinium’s online panel and augmented with 499 video assisted phone interviews using the same questions, this enabled us to reach members of society who were identified as being digitally disadvantaged. Fieldwork was conducted between 1 September – 6 October 2021.

The survey data was also used as the basis for a segmentation. A mixture of demographics, attitudes and behaviours were used as inputs to create the segment profiles. These included looking at location (rural/suburban/urban), age, household income, frequency of cash withdrawal, perceived benefits of using cash, usage of cash as a budgeting tool, convenience of shifting from cash to non-cash payments, ability to cope with a cashless society, and various attitudes and behaviours towards spending, cash and towards digital payment methods. Subsequently iterative cluster analysis was conducted to organise respondents into segments based on how similar they are on these dimensions.

Several segment solutions were produced by Opinium. A 5-segment solution was identified as the most stable solution statistically, but also the most actionable one from a marketing perspective.

41 participants were recruited for a series of three online focus groups run by the RSA. For two of the sessions, we grouped two segments together based on similar level of economic security for part of the focus group and then split them in to two break-out groups. One group contained 8 cashless converts and 6 cashless sceptics, the other contained 8 cash occasionals and 6 cash keepers. A final group was run with 12 cash dependents.

From our phone survey sample, we also conducted a further 4 interviews with Cash Dependents, this included 2 participants that had been identified as having low digital engagement through our survey screening process.

Finally, we conducted a series of semi-structured qualitative interviews with policy makers, industry experts and innovators who are building new products and services to support cash users. A list of people and organisations that we interviewed is listed in the acknowledgements.

The findings from across the research project have been written up into this final report.

Alongside the report, two data dashboards were developed showing our regional and segmentation data by RSA data visualisation experts, using the open-source software package Tableau.

About The RSA: The Royal Society for Arts, Manufactures and Commerce (RSA), is committed to a future that works for everyone. A future where we can all participate in its creation. The RSA has been at the forefront of significant social impact for over 250 years. Our proven change process, rigorous research, innovative ideas platforms and diverse global community of over 30,000 problem solvers, deliver solutions for lasting change. Find out more at www.thersa.org

About the LINK Scheme: The LINK Scheme is the UK’s Cash Access and ATM Network that connects virtually all the UK’s ATMs and provides communities with access to cash through services such as cashback at retailers’ tills, enhanced Post Offices and Banking Hubs. LINK’s role is to provide UK consumers with universal access to cash in a safe, convenient and rapid manner. A free LINK Cash Access App showing consumers their nearest free cash access location can be found at https://www.link.co.uk/consumers/locator/ .

LINK has 34 members that issue cards and deploy ATMs in the UK. LINK is a not-for-profit organisation and governed by an independent Board, which has a clearly defined public interest remit. Find out more at www.link.co.uk.