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Natalie Ceeney CBE

February 2020

Natalie chaired the independent Access to Cash Review which published in March 2019. She is also Chair of Innovate Finance, the UK’s Fintech industry body..


5 - 7 Minutes

Bridging the divide: Declining cash and the role of ‘inclusive by design’

Visa Navigate met with Natalie Ceeney CBE, Chair of the UK’s ‘Access to Cash Review’, an independent group commissioned to consider consumer requirements for cash over the next five to fifteen years. Natalie shared the report’s findings on the current situation in the UK, the impact that a decline in cash is having, and her recommendations on how to make digital payments work for everyone, both in the UK and internationally.

Visa Navigate (VN): Why was the Access to Cash Review commissioned?

Natalie Ceeney (NC): The UK is one of the global leaders in the adoption of digital payments, and the use of cash is in rapid decline. Ten years ago, around 66% of all UK transactions were in cash, but that has now dropped to just 28%. To put that into perspective, across the rest of Europe cash usage averages around 80% of all transactions.

The UK is further along a journey towards a cashless society than many other countries and the world is watching to see what happens next. The Access to Cash Review was set up to look at this situation and consider what the UK needed to do to ensure that people weren’t left behind by the digital payments revolution.

VN: Can you recap the key findings of the report?

NC: The headline figure of low cash usage in the UK hides important variations across the country. Digital payments work for many people in the UK - but they don’t work for everyone. If you spend any time in London, it’s entirely possible to survive without cash, but if you go into more rural areas it is a different story. Our broadband and mobile infrastructure is a long way from offering universal coverage.

However, even if we had the right infrastructure, there are many population segments for who cash (currently) just works better than digital. For example, many people on low incomes don’t want to transact digitally, as the risk of getting into debt if payments are debited when you don’t have the funds is just too high. Cash is still a very effective way of budgeting. The data tells us that if you earn less than £10,000 per year, you are fourteen times more likely to be dependent on cash than if you earn over £30,000.

We estimated that 17% – or around 8m adults – would seriously struggle to survive without cash. Yet despite this, they are fast losing their ability to access and use it.

VN: What are the structural drivers behind this trend?

NC: The UK’s cash infrastructure was designed for delivering cash in an era of high cash usage. But the commercial model underpinning the complex cash infrastructure is coming unstuck. Bank branches are shutting, and ATMs are being removed because it is not economically viable to keep them open. Meanwhile some merchants are starting to refuse cash because it is too expensive to store, transport and deposit, partly because of bank branch closures increasing their costs and risks to deposit cash.

Everyone is working to entirely rational commercial incentives. However, if this trend continues, millions risk being excluded from payments because of a lack of access to cash.

VN: What do you think needs to be done, and what advice would you give to other countries?

NC: Until we are in a world where everyone can use digital payments, it is essential that we enable people to use cash. That requires it to be seen as a public policy issue and not simply as a commercial service that can vary according to rational market forces.

The cash infrastructure can no longer be taken for granted. It needs clear and thorough planning and oversight. You wouldn’t leave the provision of other essential services like water and electricity entirely to market forces, so why would you for something as fundamental as being able to pay?

In our report we made a series of recommendations which were widely accepted – including guaranteeing access to cash, helping maintain cash acceptance, creating a more sustainable wholesale cash infrastructure and in parallel working across the industry to make digital payments a viable option for everyone. There needs to be a coherent strategy working towards the goal that everyone (who wants to) can get access to cash and be able to spend it. We also need a serious programme to extend digital payments for everyone.

This solution is about managing a decline efficiently and effectively. The way we currently provide cash in the UK is expensive and duplicative, and a coordinated approach would both save banks money and support the infrastructure while cash use declines.

VN: What can we do then to ensure people have access to cash?

NC: In my view, banks should be obligated to provide their customers with suitable cash access – just as it is a legal requirement that everyone in the UK can post letters and get clean water.

We need to be innovative because the system needs to be viable and appropriate for every community. And note that I said people need access to cash, not ATMs. Consider a traditional rural English village that only has a pub – that pub should have the ability to distribute cash so people without a car can still function in society. I really welcome the commitment of the sector – including Visa – to use interchange as an incentive to reward merchants for giving cashback with a purchase, and to find solutions for cashback without purchase.

VN: Should the ability to spend cash be legislated?

NC: This is an increasingly contentious issue. There are parts of the world, including three US states, who have legislated to require all merchants to accept cash. However, we believe this is too draconian for the UK, and that we can achieve the same goal in a smarter way. If we make it easier for SMEs to bank and deposit cash, we are likely to keep cash acceptance high.

Technology can solve a lot of this. Deposit-taking ATMs and ‘smart safes’ are widely used outside the UK, but we need a change to the Bank of England rules, and the agreement of an interchange rate for deposits if they are to take off in the UK. I think it is incredible that I can do my shopping on my phone and have it delivered, but a service through which someone comes to collect a merchant’s cash isn’t widely available.

VN: Is a world without cash viable in the future?

NC: For consumers, I do believe that a world where we can all use digital payments is viable. As we did our research, there was no consumer need we came across that we couldn’t envisage a solution for. But these solutions won’t happen by default. Some consumer segments are not inherently profitable to serve, yet still need solutions if we are to include everyone. I believe that if policy makers are serious about considering a cashless society, we need a coordinated policy initiative to ensure we have payments solutions that work for everyone, as well as a pan-UK connectivity infrastructure.

VN: You have mentioned the need to innovate and bring new digital technologies into play, are you seeing this elsewhere?

NC: Digital technology can be inclusive - if it is inclusive by design. There are examples around the world. A peer-to-peer payments network like SWISH in Sweden makes small payments that have traditionally been in cash (e.g. to window cleaners, gardeners) convenient and real-time, and is as easy to use as text messaging.

Elsewhere you have services like MPESA in Africa, which is designed specifically to bring millions into the banking system though really simple mobile phone based banking. And in India, the Aadhaar biometric system allows people to identify themselves with their thumbprint, eradicating literacy and numeracy issues.

We’re also seeing great examples emerging in the UK – one of the most recent being a fintech called Toucan, which uses Open Banking to enable those with mental health issues to allow their bank to alert a friend or relative if their spending goes awry. This is exactly the sort of service that will encourage people to use digital banking and payments because there is a safety net.

VN: What advice would you give – to the UK and other countries around the world?

NC: Almost every country in the world is facing similar issues with the decline of cash, but most are behind the UK on the trajectory.

The most important thing is to plan. That means that the provision of cash needs to be considered as a policy issue, not just a commercial one. In that way you can keep cash viable while people need it and make digital payments work for everyone. The default is that we sleepwalk into a cashless society – which will leave millions behind.

To reiterate, this is all solvable – but it won’t solve itself.

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