Cash access vital but small firms must have freedom to choose payments mix
Responding to the Treasury Committee’s report, Acceptance of cash, Tina McKenzie, policy chair, Federation of Small Businesses (FSB) said: “For thousands of small businesses, cash remains an essential payment method – and it’s vital they continue to have the option to accept cash, as well as other payment methods, now and in the future. Small firms must have the freedom to choose the payments mix that works for their individual circumstances, be that cash-only, card-only, digital or fintech solutions, or a combination of any or all of these.
“But for cash to remain a viable method for small firms and consumers, including many vulnerable groups, the right infrastructure has to be in place. We’ve seen a huge decline in the bank branch network over recent years, with the infrastructure supporting use and access to cash steadily contracting. These closures have led to more small firms opting for digital-only payments, as the logistics and costs of cash handling become unmanageable.
“We need to see facilities like shared banking hubs brought in at speed, providing services to both businesses and consumers. Yet the current pace of agreeing and setting them up doesn’t currently match the speed of bank and building society branch closures in local high streets. Our research found a third (34%) of local businesses say reduced ability to accept cash payments in the future would pose a big risk to their local high street.
“In areas where bank branches have closed, banking hubs provide consistent and secure facilities for cash withdrawal and deposit for businesses, as well as financial advice. This is particularly crucial in rural areas, which are the hardest hit by closures and often have higher demand for cash payments.
“Our communities are also being hit by closures of post office counters, which need to be maintained to help small business owners deposit cash. We want to see UK banks sign up to maintain their cash services in post offices for the next five years – including small business owners being able to deposit cash takings. This will guarantee continued cash infrastructure for small firms and their customers.
“Cash is also a key competitor to cards and other kinds of payment, acting as a brake on rising fees for other forms of payments, as well as acting as a reliable backup if digital systems are unavailable. It’s also key in places with poor digital connectivity.
“We need to make sure there’s a flexible, adaptable and inclusive payment system, which allows small firms to choose the payments mix which works for them – while making sure cash is still very much part of the equation.”