Scots use of cash machines falls as review warns of risk of 'sleepwalking into a cashless society'

The Access to Cash Review published today says that around eight million adults (17% of the population) would struggle to cope in a cashless society. 

The findings made said "cracks in the system are showing" - and bank branch and ATM closures are just the "tip of the iceberg".

The review reveals that in the space of just one year, the number of cash withdrawals in Scotland has dropped by 3.3%.

It comes a month after the Herald revealed Scotland is losing cash machines at a rate of more than 40 a month in Scotland raising new worries about how people access their money while the nation suffers a raft of bank branch closures.

It recommends that a "guarantee of cash access" should be introduced to help the UK avoid sleepwalking into a cashless society - with those providing essential services required to allow consumers to pay by cash.

Cash should be seen as a core part of the UK's infrastructure and not just a commercial issue, it said.

As the report was released, the Bank of England said it would bring bodies together to develop a new system for wholesale cash distribution that will support the UK in an environment of declining cash volumes.

Sarah John, Chief Cashier, said: "The action we are announcing today will help to support cash as a viable means of payment for those who want to use it."

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The report said: "For consumers, we believe that it is both sensible and commercially viable for the banks and regulators to offer a 'guarantee' of cash access.

"In part, they can do this by encouraging innovative ways of accessing cash, rather than just protecting increasingly unviable ATMs or, worse, charging consumers for access."

The review is funded by cash machine network Link, but is independent from it.

Gareth Shaw, head of money with the consumer organisation Which? said: “We have been warning for years of the risk of Britain drifting towards a society where millions of people who rely on cash face being cut off - so this review’s recognition that the system is on the brink of collapse should be an urgent wake-up call.

“Government, regulators and banks must now act on the review’s recommendation to guarantee cash access for nearly half the population who consider it a necessity - especially those in communities hit by a double whammy of bank branch and ATM closures.

"With our vulnerable digital banking systems currently being hit by more than one IT failure every day, we believe the Government should go a step further and appoint a single regulator with a statutory duty to protect access to cash and build a sustainable cash infrastructure for the UK.”

Figures from showed that in November there were 6037 of their cashpoints in Scotland - 330 fewer than in March.

And the number of free to use cashpoints has also dropped by nearly 200 over the eight months to 5,198.

It comes after LINK announced that hundreds of communities in remote and deprived parts of Scotland were expected to be protected from losing their cash machines.

LINK announced a new ‘super premium’ fee will be paid by banks that they say will "significantly increase" payments to ATM operators where cash machines are situated in remote and less well-off parts of the country.

Santander in January announced it was shutting 15 Scottish bank branches - the latest it a raft of closures over the past few years.

LINK has said a cut in the number of cash machines has been necessary as transaction levels have dropped by around seven per cent in the past year as people move to using alternative payment methods such as contactless cards.

But there is concern over access to cash as it is estimated the UK has lost nearly two-thirds of its bank and building society branches over the past 30 years, from 20,583 in 1988 to 7,586 today. The loss of those sites has left nearly one in five of the population more than nearly two miles away from their nearest branch.

The new report said the problem is not just about people being able to withdraw cash - it is also about whether, in future, people will be able to make purchases at places which accept cash payments.

It said the economics of handling and accepting cash could lead to an increasing number of retailers going cashless.

Cash is now only used for three in every 10 transactions, down from six in 10 a decade ago and is forecast a fall to as low as one in 10 transactions within the next 15 years.

The report said the shift away from cash towards digital payments is placing "significant strain" on the UK's cash infrastructure, which costs £5 billion a year to run.

Natalie Ceeney, independent chairwoman of the Access to Cash Review said the dangers of "sleepwalking into a cashless society" mean millions of people could be left out.

She said: "There are worrying signs that our cash system is falling apart.

"ATM and bank branch closures are just the tip of the iceberg, underneath there is a huge infrastructure which is becoming increasingly unviable as cash use declines."

Nicky Morgan, who chairs the Treasury Select Committee, said: "It's clear that the hard work for policymakers must start here".

And Economic Secretary to the Treasury, John Glen, said: "We're working closely with regulators and the banking industry to ensure that people continue to have real choice over how they spend their money."

READ MORE: Move to give cash machines in Scotland legal protection as thousands face axe

Eric Leenders, managing director, personal finance, UK Finance said: "The industry supports the recommendations in this timely report."

Chris Hemsley, head of policy for the Payment Systems Regulator, said: "We have been carrying out work in this area to identify longer-term solutions to address this issue.

"We all need a good choice of how to pay."