Things looking rosy for cash this summer

08 August 2024

While we may have been disappointed with both the Euros and the weather so far this year, it’s been a very different story for cash over the summer months, with it being a clear winner when it comes to both usage and access.

Not only has a new report found that the number of people mainly using cash for their everyday spending hit a four-year high during 2023, but in the same week, the new government has bestowed new powers upon the Financial Conduct Authority to allow them to introduce new rules to protect access to cash for both consumers and small businesses.

New report from UK Finance

The new report, issued in late July by UK Finance, the trade association for the UK banking and financial services sector, found that some 1.5 million adults used cash as their main payment method in 2023 – a rise of 67% year on year and the first significant rise since before the pandemic.

According to Adrian Buckle, Head of Research at UK Finance, this rise is predominantly due to cash being used as a tool to help people manage a limited budget – which is hardly surprising amidst the ongoing cost-of-living crisis, which was at its height during 2023.

But while there has certainly been a Tik-Tok trend over the last year or so with young people demonstrating cash-stuffing – putting different amounts of cash in a series of envelopes to manage their money – this latest research shows it is actually those 35 and over who are using cash to help them balance their finances, while younger people (16-24-year-olds) are now opting to use their smartphones and watches to make payments.

The importance of cash

While many see mobile and card payments as more convenient, cash remains the second most popular payment method in the UK, after debit cards - with an estimated three million people still relying on it, particularly those on limited incomes.

This latest recent rise in cash usage is not surprising when you consider the many advantages of cash payments and the protection it offers:

1. Cash helps both businesses and consumers take stock of how much they are spending and helps control their spending more effectively
2. Cash doesn’t incur the same transaction fees as cards, which helps smaller and independent businesses in particular avoid these extra costs
3. The recent global IT outage also showed the importance of cash, providing a vital back-up method of payment and allowing businesses who continue to accept cash to triumph over those who have chosen to go cashless over recent years
4. Cash is also a winner when it comes to protecting your personal information - unlike card and digital transactions, which records consumer data and tracks your spending, cash remains completely anonymous, which offers both privacy and protects users from fraud and cyber attacks
5. Although there are CiT costs associated with processing cash, there are more and more cash handling solutions around now to help businesses make huge savings - investing in cash handling equipment like the Volumatic CCi and its CashView Enterprise cash management software has proven to cut cash handling costs by up to 75%, and can minimise CiT collections too, as it provides a true end-to-end cash management solution, as well as adding eliminating forgeries, adding extra security, and eliminating time-consuming manual counting

Better access to cash

Another boost to cash this summer has been the introduction of stricter rules on ensuring banks and building societies offer access to cash.

Announced by the City watchdog, the Financial Conduct Authority (FCA) in late July, the new rules would require banks and building societies, when considering branch closures, to fill gaps in cash access with measures such as banking hubs, ATMs and Post Office facilities.

The FCA stated: “Along with the Payment Systems Regulator (PSR), the Bank of England and the Treasury, we are committed to protecting access to cash – particularly for consumers in vulnerable circumstances who rely on it. This is part of our business plan commitment to put consumers' needs first and to ensure they can access the cash they need.”

Tulip Siddiq, Economic Secretary to the Treasury said: “Cash continues to play a vital role in the lives of millions of people and businesses across the country, so I welcome the FCA's new rules.

"Our commitment to roll out 350 banking hubs will also help provide local communities with access to the critical banking services people rely on."

These new rules will come into effect on 18 September 2024.

Volumatic’s Sales & Marketing Director Mike Severs also welcomes such positive news for cash, stating: “As industry leaders, we’ve known for some time that more and more people are using cash again on a daily basis and it’s great to have that confirmed by the recent report from UK Finance.”

“It’s also great that access to cash is being protected with new rules from the FCA, something that we, and others in the industry have been campaigning for, for a long time. It’s vital for both businesses and consumers to have easy and local access to cash, and these new rules will ensure cash usage continues to rise, and hopefully encourage more businesses to realise that cash is going to be around for a long time to come as an important and valid method of payment and that they should be welcoming it with open arms.”