This is the text of the speech as drafted and may differ from the delivered version.
Good afternoon and thank you for inviting me to speak to you all today on this important subject, and the role that the Payment Systems Regulator will play in protecting everyone’s ability to choose to use cash, for so long as they want to.
This afternoon I am going to focus on three particular aspects of our work:
- First – How we are protecting everyone’s access to cash today – through the main way we currently obtain cash – ATMs;
- Second – What we are doing to support people’s ability to continue to use cash in future; and
- Third – How you can help us with our work.
But I would like to start with a few observations about where we – as a society – are in terms of cash use.
In one form or another, cash has been an important way for people to pay for things for centuries. But, over the last few years, we’ve seen people choose to pay for things in different ways – whether by cards or, more recently, digital payments mobile phones and even watches. This is prompting a debate about the role of cash and raises important policy issues – for regulators, government and society more generally.
It has also prompted me to consider my own use of cash over the years.
I used to take out my weekly budget in cash, and that had to see me through the week. But, over time, my use of cards and internet banking has grown. And I can now go days without using cash – relying on my mobile phone to allow me to get around London, buy lunch and other incidental purchases.
But I still carry cash, and use an ATM most weeks. When I go somewhere new I rely on the reassurance that holding cash brings, while for some types of payments – to school fayres, sports clubs and collections at work – cash is still king.
And my own experience resonates with what we see across the UK. Yes, cash use is declining – more payments are being made by debit card than by cash, and there is a striking growth of contactless payments.
But our own research shows that 80% of people have used cash in the last week. So, while many of us are choosing to use less cash, and an increasing majority prefer to use other methods, it remains an important part of most of our lives. And, when it comes to where we get that cash. The answer is pretty straight-forward: for the vast majority it is a free-to-use cash machine. UK Finance figures show that nearly 80% of cash acquired by businesses and consumers was through an ATM.
And the UK is better served by those cash machines than it has been in the past. We have more ATMs now than 10 years ago, and more of them are Free-to-Use. But in the last couple of years we have seen this increase in free-to-use ATMs stall and now start to fall. This follows the general reduction in the use of cash, as many of us make greater use of electronic payments. But this reduction in the use of cash is unlikely to be uniform, and shines a light on the fact that some communities – people and businesses – rely on cash, but find it difficult to access it easily.
This often conjures up images of remote rural locations. But the truth is that these access issues can be in both rural and urban areas. Indeed, recent research from the University of Bristol has highlighted that challenges exist in parts of our cities – particularly where there are higher levels of social deprivation.
So we need to be careful to understand the needs of people and businesses – particularly the vulnerable, wherever they live.
And with declining use of cash, LINK is taking difficult decisions to reduce the total cost of the network of free-to-use ATMs. While reduced withdrawals from ATMs is adding to the commercial pressure to switch some of the free-to-use machines to ones that charge. Businesses are also adapting. With fewer of us using cash, some are finding that it makes sense to go cashless – it can avoid the costs, time and trouble of having to bank their takings. While at present this might only be an emerging trend in parts of our cities, larger retailers such as Sainsburys are also experimenting to see how customers react to not being able to easily pay with cash, with its ‘till free’ trial store.
So, while the growth of electronic payments and innovation brings benefits to many of us, in terms of convenience and new tools to manage our money, we all need to be mindful that it also risks leaving others behind.
The need for coordinated action
This is why, in this year’s annual plan, we made cash access a particular focus of our work. And we committed to continue our work to understand what changes might be needed to protect people’s access to cash, as society moves towards greater use of digital payments and cash has a smaller role.
We see it as our job to ensure that everyone has a good choice of how they can pay; so that they can play a full part in society. An important part of that is making sure people are not left behind or do not have good access to cash for as long as they want it.
It is relatively easy to describe that in general terms.
But, turning that into a series of practical changes that work coherently together is more of a challenge. This is where the PSR is committed to support action on a number of different fronts.
First, action is needed across the different ways cash is accessed – be it ATMs, cashback, bank branches and the post office. But cash acceptance is also key to ensuring you can spend your money when you have it. So we also need to think about the costs of accepting cash and depositing it with banks.
Second, action is needed across different time periods. We need action now to protect free access to cash from ATMs – and our regulation of LINK is a key part of this. But looking ahead, we also want to see new ideas to emerge to improve the provision of cash, as usage declines. And while we do this, we need to all be working towards a coherent end-point.
And, third, action is needed from all of us with responsibility for aspects of the cash system. He