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A newly appointed minister has said the Labour government has "no plans" to mandate that retailers accept cash, but is also not planning for a "cashless society".
In her first Treasury Committee hearing since taking on the new role, economic secretary to the Treasury Emma Reynolds took questions from MPs on acceptance of cash.
Dame Siobhain McDonagh, a Labour MP, began by asking the minister whether consumers with learning difficulties who cannot use electronic payments should be excluded by cashless businesses.
McDonagh referred to a consumer, who previously gave evidence to the committee, who was unable to purchase a coffee in Starbucks because the branch did not accept cash.
“Should Starbucks accept cash?”, the Labour MP asked.
“We have no plans to regulate businesses — big or small — to compel them to accept cash,” Reynolds replied.
McDonagh argued that, as businesses move away from accepting cash, vulnerable and marginalised consumers will increasingly find themselves financially excluded.
Reynolds said the government acknowledges this risk, but does not see mandated cash acceptance as the appropriate solution.
“Businesses should have the flexibility to offer the choice in payments that they think their customers need,” she said.
She noted that Australian lawmakers are currently debating mandating cash acceptance for essential goods and services, but argued that this approach is unwise given the difficulty of defining what is “essential”.
Cash acceptance at present
While MPs focused on the risk of large businesses going cashless, Reynolds said she was “encouraged” by figures provided to the committee by the Association of Convenience Stores (ACS).
In December, the ACS told the committee that more than 99 percent of its 50,000-plus members accept cash.
James Lowman, ACS chief executive, said that cash remains crucial for the convenience sector, providing financial flexibility and a reliable fallback option when electronic payments fail.
“The cost-of-living crisis saw an increase in the use of cash, particularly as people used that as a way of managing cashflow and finances in their own household,” he said.
“We see cash as being a very important part of a number of payment methods that consumers are going to be using for a long period of time.”
Taking the same position as the government, the ACS does not support the introduction of a mandatory requirement for retailers to accept cash.
The ACS’ main concern is that if such a requirement were introduced, retailers could face increased costs and operational burdens.
Depositing cash through a high-street bank typically costs between 40p and £1.50 per £100, depending on store location and supplier agreements, the association said.
Some retailers use other services, where they may be charged a flat fee for cash pickups and deposits.
Others choose to deposit cash through Post Office branches, which increasingly double as banking hubs.
“Individual businesses carefully evaluate these banking costs, balancing them against the overall value that accepting cash payments brings to their operations,” said the ACS.
“If convenience retailers are required to accept cash, they will face increased costs related to securing, transporting and banking relatively low volumes of cash, given the current trajectory of cash usage.
“It is therefore crucial that retailers retain the autonomy to accept payment methods that align with their customers' needs.”
Is the government’s Access to Cash initiative sufficient?
Reynolds said the government will continue to focus on the rollout of its Access to Cash initiative in partnership with the Financial Conduct Authority (FCA).
The Access to Cash regime requires banks and building societies designated by the government to assess and fill gaps in cash access provision that significantly impact consumers and businesses.
Reynolds described the Access to Cash initiative as “very ambitious”, noting that Labour’s current aim is to open 350 banking hubs under the initiative by the end of the current parliament.
She added that 180 of these banking hubs are either already open or are in progress, and that 123 cash deposit machines have been installed under the scheme.
“We are not planning for a cashless society,” she said. “That’s why we come back to the Access to Cash regime, because we want to enable small businesses to deposit cash in a convenient way so that, if they wish to, they can continue to accept cash.
“Without that framework that’s provided for by the Access to Cash regime, that would certainly lead to fewer businesses accepting cash.”
Ron Delnevo, chair of the Payment Choice Alliance (PCA), spoke to Vixio about Reynolds’ comments during the Treasury Committee hearing.
He said that Reynolds appears to have been poorly briefed prior to the hearing, and that several of her statements indicated a lack of background knowledge on the issue of cash acceptance.
If Labour hits its target of creating 350 banking hubs during this parliament, Reynolds said, it would ensure "satisfactory" access to cash across the UK.
According to the PCA’s research, the UK would need around 1,200 banking hubs to ensure satisfactory access to cash for in-scope communities, based on the FCA’s criteria.
Others, such as Natalie Ceeney, former chair of the Access to Cash review and current chair of Innovate Finance, have previously put the figure at as many as 2,000.
In 2023, ATM operator LINK estimated that more than 1,000 banking hubs would be created by 2028.
In any case, Labour’s commitment to 350 hubs by the end of the current parliament represents a significant downsizing of the initiative’s ambition.
“That number would only scratch the surface, even if they had ATMs, which they don’t,” said Delnevo. “At least 1,200 banking hubs, with 24/7 withdrawal/deposit ATMs, are required.”
Cash acceptance legislation in other jurisdictions
The PCA continues to support the introduction of legislation which mandates that retailers accept cash.
Delnevo, like several MPs during the hearing, noted that many similar jurisdictions, including Belgium, Denmark, Spain, Ireland, France, Norway and Australia, have either passed legislation along these lines, or are currently debating it.
“Governments of every flavour — centre, left and right — have recognised that cash is vital in any democratic society,” said the PCA chair.
“UK Payment Choice legislation is required in 2025, whether as a standalone measure or part of a wider bill.”
