Cash to vanish by the summer

CASH could be almost killed off by the end of the summer as shoppers switch to using cards and never go back, the head of the ATM network warned last night.

John Howells, chief executive of Link, which runs Britain’s 70,000 cashpoints, said the coronavirus pandemic has dramatically sped up the switch from cash to card and online payments.

Before the shutdown, cash was still used in around a third of transactions. Now Link predicts its use will slump to just 10 per cent by August as people shop and go out less, use cards when they stock up at supermarkets and avoid coins and notes for fear of picking up the virus.

Research shows that once people switch to using cards and digital payments they rarely use cash again. Previously, cash use had been expected to fall to 10 per cent by 2025 – meaning a change that should have taken five years will now take five months.

Howells said the rapid fall could see vast numbers of ATMs close as they are used less often, while withdrawal fees could be rapidly introduced on other ATMs to ensure they remain profitable.

Older and more vulnerable people would be the worst hit as they might be forced to travel miles to withdraw cash.

But Howells warned the rapid decline would hit tourism, as those visiting Britain would be unable to withdraw money, as well as selfemployed workers who only accept cash, plus 1.4 million people who do not have a bank account. Link’s prediction comes after figures last week showed the number of ATM transactions fell 50 per cent in March compared to last year.

‘Cash use is not going to come back again and resume its slow decline,’ he said.

The tap-and-go contactless spending limit was last week increased from £30 to £45.

Natalie Ceeney, the former chief financial ombudsman who conducted a major review on how people access cash, said: ‘ A lot of people will get used to using digital, and they will find it quite easy and get into the habit of using it.

‘I just think of my parents who never used online shopping. They are now doing it for the first time in their lives.’

Howells warned that Britain is not ready to lose its access to cash machines and bank notes. Analysis from Ceeney’s Access to Cash review found that a fifth of Britons could not cope without cash. Experts also warned new digital systems are vulnerable to cyber attacks. ‘We are simply not ready to move to digital systems because they do go wrong,’ Howells said.

Ceeney added: ‘We were already worried about leaving parts of the population behind and the virus has accelerated that. What we mustn’t do is sleepwalk into being cashless.’