As the contactless payment limit rises, are the vulnerable being left behind?
The nationwide contactless limit could soon be increased to £100, but society’s shift to cashless is causing problems for those who still rely on hard cash
Cold, hard cash. That was something we all used to aspire to, but as technology makes paying by phone or card easier – and more hygienic – and the upcoming contactless payment limit review looks set to widen its use, we are increasingly becoming a cashless society.
This method of payment has become so popular that the limit on contactless payments could soon be increased to £100. The current tap-and-pay limit is £45, which was introduced last year – up from the original limit of £35 – as more shoppers sought to go cashless due to the Coronavirus.
Indeed, our shift towards a fully cashless society has been accelerated by the pandemic. Stores and shoppers have relied heavily on it, shunning cash as they tried to reduce contact points and prevent the spread of the virus. As such, cash machine use in 2020 fell 38%, according to ATM operator Link. It also estimates that cash now accounts for as little as 10% of all payments made in the UK. Figures compiled by UK Finance suggest that in 2009, the proportion of payments made with cash was as high as 58%.
While this change might be a welcome one for the majority – indeed, 7 million Brits used cash once a month or less in 2019, according to UK Finance – there is a downside to our reliance on contactless payments for those who still rely exclusively on cash. For those without internet access, smart phones or the know-how to access online banking, the dwindling number of ATMs and rising number of cashless stores is a worry.
A survey by consumer group Which? found that 34% of people had been unable to pay with cash at least once since March 2020. It said that food stores, pubs and restaurants were the most likely to refuse cash.
Cash machines are disappearing too. Link claims that the number of ATMs reduced by 10% in 2020, and it is a trend likely to be exacerbated by the contactless payment limit increase to £100. HSBC has already announced it will close 82 branches in the UK this year, taking with them their cash machines and tellers.
This could force those still relying on cash – often our most vulnerable, including older people, the disabled and those living in poverty – to have to travel further to access cash, or rely on ATMs that charge a fee for withdrawals.
As such, many are calling on the government to intervene, including campaigners behind a study titled Access to Cash Review, which claims 8 million people in the UK would struggle to survive without cash. In the Budget revealed in March 2020, chancellor of the exchequer Rishi Sunak promised to legislate to protect physical cash for as long as people needed it.
There is also a pilot scheme evaluating new ways to get cash to those who rely on it, as the number of traditional ATMs and bank branches shrink. Called Community Access to Cash Pilots, it is testing schemes such as cash home delivery services or allowing retailers to offer cashback without a purchase needing to be made – something the Treasury said it would consider relaxing rules around as cash points become harder to find.
While the new contactless payment limit might make the weekly shop a quicker and easier transaction for most of us, it is clear that some of our most vulnerable citizens still rely on cash in hand. As we march towards a cashless society, it is important that they don’t get left behind.