Access to cash
Last updated: 2 October 2019
We think it’s important that everyone has a good choice of how to make payments, in a way that works for them. While UK consumers and society are increasingly using a wide range of ways to pay, being able to pay with cash remains important.
Use of cards and other digital methods is increasing, which means that cards are now the most frequently used payment method in the UK. However, our research shows that over 80% of us pay for something using cash each week and there is a significant minority who, for a range of reasons, remain reliant on paying in cash.
Our overall objective is to support cash access which meets the needs of anyone making payments, including widespread geographic access, for UK consumers who need or want to use it as a payment method.
What are we doing?
We’re carrying out a programme of work to make sure people can make payments in the way they want.
We’ve already been undertaking a significant piece of work with LINK – the UK’s biggest ATM network – to make sure it delivers on its commitment to maintain the existing geographic spread of free-to-use ATMs for cash access. This has involved using our regulatory powers and we gave them a Specific Direction at the end of 2018.
We also have a wider programme of work underway that is seeking to answer the following questions:
Why do people want to use cash to pay?
We want to understand the different reasons and extent to which people rely on cash. This will help us to better understand how their need to access cash might be best met now and in the future.
What are the economics of providing people with access to cash?
We want to better understand the costs and other incentives that can affect the different ways cash is, or could be, supplied.
What are the options for reform?
We want to identify how existing ways to access cash might need to evolve to meet people’s needs and consider whether new alternative provisions are needed, and how quickly they might be delivered.
Our work programme
Our work on access to cash will cover a number of complementary areas. We will update this web-page as our work in these areas develops, taking into account our developing analysis and information we receive from stakeholders.
As you would expect, throughout this work we are closely engaging with government and other relevant authorities, the industry, consumer groups and other stakeholders with an interest in cash. In particular, it is important that all of these areas of work are considered in the context of the wider cash system.
The work across the different parts of the cash system is being co-ordinated through the Joint Authorities Cash Strategy Group, chaired by HM Treasury, that was announced on 3 May 2019. This brings together government, the FCA, the Bank of England and the PSR.
We also know that the industry will want to continue to develop their own ideas and proposals to improve how their services meet the needs of their customers. We will continue to work closely with industry in this respect, including to understand how market developments affect the need for and nature of any further regulatory interventions.
Specific areas of work
Consumers’ and society’s cash needs
We want to understand consumers’ and society’s cash needs, and the factors that drive their demand for cash and how they access it now and in the future.
We commissioned market research exploring consumers’ and businesses’ cash needs and their views on different ways of accessing it and have published these findings, along with a call for views, to build on the debate (including the Access to Cash report) as to what is needed to support cash access which meets the needs of consumers. We are inviting people to share their views on this research and on the implications of these findings. Of particular interest to the PSR is how cash usage may evolve in future, and how best to ensure a network of cash outlets which meets people’s needs. We have published a short paper to support this discussion.
Soon we will launch a round of stakeholder engagement to gather further insight into society’s need for cash. This will help to inform our next steps. If you would like to contribute to these discussions we invite you to register your interest using the email address below.
We will work with other authorities and anyone who has an interest in this area to assess proposals for how these cash needs can be met.
Considering the different ways of accessing cash
We will look to establish what costs and other factors need to be taken into account in giving access to cash.
Today ATMs are the main way people access their cash so our immediate work in this area will look at the incentives involved in providing ATMs (see below). But it is important to recognise the pace of change in people’s and businesses’ use of cash and other payment methods, and the potential for innovation in how cash is provided. Other ways of providing cash access will be increasingly needed to complement the use of ATMs.
We are also building a picture of the range of existing and potential methods of providing people with their cash, whether they operate on a level playing field and whether there are barriers to their further development and use. We will explore whether any such barriers could be reduced or removed. We are discussing initiatives in this area with relevant stakeholders. Enabling and promoting innovative methods of accessing cash continues to be an important aspect of the wider work.
Incentives for future ATM provision
Turning specifically to ATM provision, we want to make sure there are robust incentives in place for ATM operators so that machines are provided in the areas where people want or need them.
As part of this work, on 6 June 2019 we published a Call for Views on ‘Considering the incentives to deploy free-to-use ATMs in the LINK network’. We looked at why ATMs are placed where they are in different areas of the UK and what factors might affect where they are placed, focussing on the structure of the interchange fees. These fees are, largely, funded by banks and, ultimately, paid for by us all as the customers of banks. We wanted to identify the extent to which interchange fee reform could better ensure ATMs are provided where they are most needed given the changes in usage of cash - or whether other approaches may be needed.
We received a number of responses and hosted a roundtable event, attended by industry, consumer groups and other regulatory bodies. We published the 'Responses to our discussion paper on the LINK interchange fee structure and summary of our roundtable discussion' in September 2019.
We are considering which options can be assessed in more detail and plan to set out our view on the way forward for interchange fees before the end of the year.
Interaction with the wider cash system
Working closely with other authorities, we will consider these issues in the context of the overall cash system – wholesale and retail – and how different ways of accessing cash might interact. It will be important to ensure that all the different aspects of the overall cash system work well together to provide better outcomes for consumers and businesses.
We will provide additional detail of our work in this area in due course, but we expect to look at what lessons can be learned from other countries, work with industry on monitoring where gaps in provision might occur, and explore how local communities can have a voice in ensuring they have appropriate ways to access cash.
We will also support the work of other authorities, especially the Bank of England and FCA, in developing future wholesale cash arrangements, the ease and cost of accepting cash and looking at making digital alternatives available for a broader range of consumers.
Further options for ensuring future cash access
We will bring this work together to consider what options there are within it to make sure people have the access to cash they need or want. This will reflect how the provision of cash evolves over coming months.
As part of this we will consider the costs and benefits of different approaches being suggested by different stakeholders, identify suitable options going forward and what would be needed to deliver those.
Here is a brief outline of some key milestones:
• Early June - publication of our call for views on the structure of LINK interchange fees
• End of June - Sign-up closes for our roundtable discussion on the structure of LINK interchange fees
• July 2019 – roundtable discussions on the structure of interchange fees
• Summer 2019 – publication of findings on market research into UK cash needs, with stakeholder engagement
How to contact us about this work
We are interested to hear all views and evidence that will help to inform our work on access to cash. You can send any comments to PSRcashaccess@psr.org.uk