Innovation in alternatives to cash must become a priority, according to John Glen, economic secretary to the UK government's treasury.
“I completely embrace the opportunities that exist in other [payment] sources. I am not trying to hold onto cash, what I am trying to do is to say that the recognition that we feel in government, and the relationship that we have with our constituents is that need to have ready access to cash through the ATMs,” said Glen on a panel at the P20 conference in London this week.
“My instinct is not to rush into legislation,” he said. “But we have to see rapid evolution in alternatives [to cash].”
Glen was responding to comments made by Payzone UK chief executive, Clive Kahn, regarding the impact of potential legislation to force retailers to continue to trade in cash.
“Retailers on the high street are already under considerable cost pressure, adding an additional cost requirement on them to take cash - I think it is only going to make more and more retailers close their doors,” said Kahn.
A rise in cashless transactions has brought about concerns that the move away from cash could be leading to the exclusion of segments of society, particularly as in Sweden many banks refuse to accept cash deposits.
In March, a report on access to cash commissioned by LINK, the UK’s largest cash network, was welcomed by the UK’s Financial Conduct Authority (FCA), and the Bank of England (BoE).
The report stated that 17 percent of the 2,000 surveyed said they would be unsure of how to cope - or wouldn’t cope at all - in a cashless society.
The BoE said in March it would gather relevant stakeholders to develop a new system for wholesale cash distribution that would “support the UK in an environment of declining cash volumes.”
Kahn argued that growth of online shopping and digital banking has already caused division, regardless of the use of cash.
“We will work together to find the right balance but access to cash does not equal financial inclusion,” added Carlos Menendez, president of enterprise partnerships for international markets at Mastercard.
Initiatives such as Open Banking have provided an opportunity for increased innovation but more must be done, according to Glen.
“My instinct is not to legislate, but it is to work with the industry, to work towards an enabling regulatory environment, and to do that urgently," he said.