We’ll count the cost if we can’t pay as we wish

THEY SAY money talks. And if it could, it would be louder than ever.

There is now around £70bn worth of physical currency in circulation in the UK, a figure which has almost tripled over the past two decades.

Though more and more business and banking activity takes place online – opening up huge opportunities for small firms all over the country – cash continues to play a crucial role in society.

Published in December, the comprehensive Access to Cash review suggests that 25 million people use cash on a regular basis, two million use notes and coins for all of their purchases and over one million do not have a bank account.

From our perspective here at the Federation of Small Businesses, the upshot of this is that we still have plenty of shoppers walking through the door wanting to pay using cash rather than card – or indeed a smart phone or watch.

The bad news for the millions of people for whom cash is king – often vulnerable consumers such as the elderly, those with a disability or those on a very tight budget – is that our cash infrastructure is under attack.

Not only have we lost more than 3,000 bank branches since 2015, we’ve also lost 2,500 cashpoints in the last six months alone. Loss of the latter has accelerated since the announcement of cuts to the ‘‘interchange fee’’ used to fund cash machines by the ATM network LINK last year.

That’s why FSB has now launched the Freedom to Pay. Our Way. campaign with the consumer group Which?.

The initiative marks the next phase of our successful #SaveOurCashpoints campaign, which saw us persuade LINK to rule out one of its interchange fee cuts and postpone another.

With the launch of this fresh campaign, our requests are now broader and threefold.

First off, we need to see the appointment of a regulator with a clear mandate to protect access to cash for as long as people want and need it.

While the Payment Systems Regulator (PSR) does have some jurisdiction in this space, its remit does not extend to protecting access to physical currency.

To date the regulator has been reluctant to intervene on this front. Its wait-and-see approach to LINK’s cuts has resulted in a huge dent to our cash infrastructure.

Secondly, we want to see banks and building societies doing more to help consumers and small business owners make the transition to online banking.

While we are moving with the times – more than 90 per cent of our membership does some or all of its banking online – far more should be expected of lenders when they decide to leave town.

The Access to Banking Standard has failed to protect the many communities right across the country that have been left branchless.

A lot of towns and villages are pointed to Post Offices as an alternative for completing over-the-counter banking transactions. But PO services remain mixed – users often face long queues, short opening hours and inadequate cash deposit and withdrawal limits.

Thanks to the tireless work of Nicky Morgan and the Treasury Select Committee, a light has now also been shone on the broken funding model for PO banking.

One real concern is that, for postmasters, there is often not any meaningful incentive to take on the responsibility of handling cash deposits from businesses.

Our third and final call is for the PSR to step in and review LINK’s failing financial inclusion programme. The regulator has sat on its hands for long enough, allowing cashpoints to close at a rate of knots.

It’s important to stress that it’s not only consumer demand for physical cash that makes it vital to small business growth. The transition to cashless can put a

We still have plenty of shoppers walking through the door wanting to pay in cash.

number of different strains on firms – not least the cost of card and digital payments.

The interchange, admin and subscription fees that accompany card terminals have escalated to the point that the PSR is now conducting a formal review of the terminal market.

If cash – serving as a competitor to card providers in the payments market – were to disappear, the chances are that these fees would increase further. Equally, a lot firms still do not have access to the broadband connectivity needed to set up digital payment facilities.

We’d encourage all those who believe in the freedom to access cash to sign our 120,000-strong petition at https://campaigns.which.co.uk/ freedom-to-pay/.

To be clear, this initiative is not an attempt to stave off the inevitable. Though reports of cash’s imminent death have been greatly exaggerated, there may come a time when it’s found to be surplus to requirement.

Until that day comes though, we should have the freedom to pay as we wish.