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UK consumer group Which? has warned that vulnerable populations are at risk of not being able to access the funds they need unless the government takes action to protect the “fragile” cash system, The Guardian reports. Just over half (51%) of UK survey respondents who have been helping someone else during the coronavirus lockdown — by either managing finances or shopping for food and essentials — said they had been reimbursed in cash. The research also indicated that 1 in 10 consumers had tried to pay a retailer using cash and had been refused.
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Weakened usage of physical currency was making cash access points harder to find even before the coronavirus crisis. In the UK, debit cards became a more popular form of spending than notes and coins in 2017, per The Guardian, and it was predicted then that cash would be used for just 16% of payments within a decade.
And the slipping popularity of physical currency has been accompanied — and likely driven, in part — by the fact that cash is getting harder to access. There were a staggering 3,303 bank branch closures in the UK between January 2015 and August 2019 — equivalent to 34% of the overall branch network in country, according to data from Which? cited by The Independent. At the same time, the number of total ATMs in operation is shrinking, and the portion of those ATMs that charge fees for use is growing, leading to a cash access crisis.
But the coronavirus pandemic has further accelerated cash’s fall from popularity. During the lockdown period in the UK, ATM withdrawals have plunged 60%, per data from YouGov published in late April cited by Crowdfund Insider. And the usage of cash on the whole has receded as well: Approximately three-quarters of UK consumers confirmed that they aren’t using physical currency as much as they were before the crisis. A solid majority (58%) say they are conducting significantly fewer cash transactions, and 54% say that they’ve been avoiding cash and using digital payments platforms.
Despite slipping usage, banks that maintain their branch and ATM footprints could drive loyalty from vulnerable customers and goodwill from regulators. In an environment in which cash access points are rapidly melting away, banks that work to ensure they offer a wide network of ways to access cash will stand out to the segment of the population that still needs it. Furthermore, since the UK government said in March’s budget that it will legislate to protect cash for as long as people need it, banks that keep their physical footprints strong could gain favor from regulators, as they would be supporting the government’s goal of maintaining cash access.
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