19 May 2025
by Payments Intelligence
What is this article about?
The rising regulatory scrutiny around cash acceptance in the UK and the need for inclusive payment systems.
Why is it important?
Declining cash use potentially risks excluding vulnerable groups and may lead to legal and regulatory consequences.
What’s next?
Regulators are likely to mandate minimum cash acceptance levels, prompting businesses to adopt hybrid payment strategies proactively.
The decline in cash usage at UK points of sale, from 22% in 2017 to an estimated 10% today, has triggered parliamentary scrutiny through the Treasury Select Committee’s latest report. The Committee, which examines the expenditure, administration and policies of HM Treasury, HMRC and associated public bodies, has conducted detailed analysis highlighting the impact of reduced cash acceptance on specific population groups. Their findings underscore a key insight: ensuring access to cash is necessary but insufficient. True financial inclusion depends on bridging digital exclusion while allowing for natural market evolution.
This dual focus—a “digital inclusion bridge”—is essential as the UK continues its transition to a more digital economy. Analysis indicates that both cash dependence and digital exclusion are strongly correlated with socioeconomic vulnerability. The responsibility for payment infrastructure executives lies in developing and implementing strategic inclusion measures that support all consumers, particularly those at risk of exclusion.
For providers, the strategic imperative is clear: proactively addressing digital inclusion can meet the needs of underserved communities while offering a competitive edge in inclusive payment innovation. The Financial Conduct Authority’s most recent Financial Lives Survey, reported that approximately 1.2 million UK adults were unbanked as of 2020, with an estimated 500,000 to 600,000 individuals actively seeking banking services but facing significant barriers. This represents both a social obligation and a significant commercial opportunity for providers innovating in this space.
The Payments Association supports the Economic Secretary to the Treasury’s market-led approach and welcomes her statement that the government has “no plans to regulate businesses, big or small, to compel them to accept cash.”
Recent industry data reveals a significant transformation in UK payment behaviours, reflecting the country’s rapid modernisation towards digital payment methods. According to UK Finance and other sector research, cash usage for point-of-sale transactions has declined substantially—falling by more than half in recent years—as consumers increasingly favour more convenient and secure alternatives.
Cash now represents an estimated 9.7% of point-of-sale transactions in 2025, continuing a steady decline that accelerated during the pandemic, when businesses and consumers widely adopted contactless payments. Current projections from market analysts suggest this figure may fall further, reaching approximately 8% by 2030.
This trend positions the UK alongside progressive economies such as Norway and Sweden, which have similarly embraced digital innovation. In contrast, cash-reliant markets such as the Philippines, Japan, and Nigeria continue to see over 35% of transactions conducted in physical currency.
While overall financial inclusion in the UK is relatively high, significant disparities remain beneath the surface. According to recent data, around 1.6% of UK adults remain unbanked, but this average masks much higher exclusion rates among certain demographics. Digital exclusion is the most significant factor, with 9.0% of digitally excluded individuals lacking access to a bank account. Unemployed adults follow closely, with an exclusion rate of 8.0%, revealing clear opportunities for targeted intervention.
Financial exclusion also correlates strongly with other indicators of vulnerability. Black adults experience unbanking rates of 6.0%, while those without formal qualifications face exclusion at 5.0%. Religious minorities—including Hindus (5.0%) and Muslims (4.0%)—show elevated rates, and residents in the UK’s most deprived areas have a 4.0% exclusion rate.
Within these broader patterns, disabled people remain disproportionately affected. Despite 16.0 million people in the UK having a disability (24% of the total population) and the so-called “Purple Pound” representing £274 billion in annual spending power, many still face persistent barriers to accessing financial services. Research from Mencap reveals that 49% of disabled individuals reported difficulties in using banking products and services over the past year.
The Treasury Select Committee’s examination of payment digitalisation highlights these challenges and reinforces the need for inclusive design in financial technologies. For individuals with learning disabilities in particular, navigating digital payment systems can be complex. Rather than perpetuating reliance on physical cash, the priority must be to develop accessible payment interfaces and simplified tools that support concrete value comprehension and ease of use.
Older adults also face notable barriers. Nearly half (49%) of people aged 75 and over report difficulties with online banking. However, this challenge presents an opportunity: with better user interface design, digital literacy initiatives, and age-friendly technology, these consumers can be supported in transitioning to digital tools—reducing reliance on declining cash systems while enhancing financial independence.
The Treasury Select Committee’s findings highlight that supporting these groups requires innovative digital inclusion solutions that address their specific needs whilst moving towards a more secure, efficient payment ecosystem that benefits society overall.
As the UK transitions away from cash, an ecosystem of digital payment methods has emerged, demonstrating the market’s ability to innovate and serve diverse consumer needs. Current data reveals how successfully different payment types have gained adoption across various online transactions.
According to recent industry data, debit cards lead online payments (69%), followed by direct debits (58%), and online payment services (including PayPal, Google Pay, and Klarna) at 53%. Credit cards maintain strong usage (47%), while traditional cash-based methods show limited adoption—cash on delivery accounts for just 14% and cash in advance only 8%. Significantly, only 3% of consumers report conducting no online payments at all, demonstrating the successful digital transition across demographics.
The market structure shows healthy competition among established players and innovative newcomers. PayPal and Apple Pay have gained significant presence in digital payments, whilst traditional players like Visa and Mastercard continue evolving their services alongside newer entrants like Klarna’s buy-now-pay-later offerings.
The rapid evolution of this digital ecosystem demonstrates how market forces naturally drive the development of solutions that cater to consumer preferences. The low percentage of consumers (just 3%) who have not conducted any online transactions demonstrates the effectiveness of market-led digital inclusion efforts.
Payment policies show reveals varying approaches to managing the transition away from cash. Different jurisdictions have chosen distinct strategies based on their specific contexts and regulatory frameworks.
In 2024, the Australian government released a consultation paper that represents one approach to transition management. The paper proposed requirements for cash acceptance in specific sectors:
This sectoral approach aims to ensure vulnerable consumers retain access to essential services during transition periods. Australia’s policy reflects their assessment of local market conditions and consumer needs.
Sweden’s experience demonstrates yet another path, with largely market-driven transition supplemented by digital inclusion initiatives. Sweden has achieved very low cash usage whilst maintaining financial inclusion through technological innovation and accessibility programmes.
Each approach represents different policy choices reflecting national economic priorities, regulatory philosophies, and consumer protection strategies in managing payment system evolution.
The Payments Association’s (TPA) director of policy, Riccardo Tordera-Ricchi, tells Payments Intelligence that TPA supports a market-led approach to the UK’s transition away from cash. While recognising the importance of access to cash for those who rely on it, TPA believes the focus should be on accelerating digital inclusion initiatives that address the barriers faced by vulnerable communities.
“We welcome the Economic Secretary to the Treasury’s recent statement confirming that there are ‘no plans to regulate businesses, big or small, to compel them to accept cash'”, he explains. “A policy environment that encourages innovation while supporting consumer choice is vital to maintaining the UK’s leadership in payments modernisation.”
Tordera-Ricchi also says that ongoing work highlights the socioeconomic dimensions of digital exclusion, and TPA continus to advocate for cross-sector collaboration to ensure that no one is left behind. By enabling a resilient, inclusive and innovation-friendly payments ecosystem, TPA aims to help the UK navigate this transition effectively and equitably.
The Treasury Select Committee’s scrutiny creates opportunity rather than threat. Their examination validates market-led transition whilst highlighting underserved customer segments.
Forward-thinking executives should accelerate digital inclusion initiatives, investing in accessible payment interfaces and simplified customer journeys to capture underbanked populations. Developing inclusive design standards that serve all demographics, including those with disabilities or limited digital literacy, positions organisations ahead of competitors still debating cash preservation strategies.
The timeline for action is clear: current parliamentary scrutiny provides a window of opportunity to establish market leadership in digital inclusion before industry standards solidify. The opportunity exists now to transform vulnerability insights into market-leading inclusive payment solutions whilst competitors remain focused on outdated payment preservation debates.
As cash use declines, UK regulators push for inclusive payment systems to protect vulnerable groups and ensure access across all demographics.
The UK’s new stablecoin rules offer regulatory clarity for issuers, setting the stage for future integration into mainstream payments.
The UK’s new crypto regulation redefines compliance for payments firms, requiring FCA authorisation and raising standards across the sector.
The Payments Association
St Clement’s House
27 Clements Lane
London EC4N 7AE
© Copyright 2024 The Payments Association. All Rights Reserved. The Payments Association is the trading name of Emerging Payments Ventures Limited.
Emerging Ventures Limited t/a The Payments Association; Registered in England and Wales, Company Number 06672728; VAT no. 938829859; Registered office address St. Clement’s House, 27 Clements Lane, London, England, EC4N 7AE.
Log in to access complimentary passes or discounts and access exclusive content as part of your membership. An auto-login link will be sent directly to your email.
We use an auto-login link to ensure optimum security for your members hub. Simply enter your professional work e-mail address into the input area and you’ll receive a link to directly access your account.
Instead of using passwords, we e-mail you a link to log in to the site. This allows us to automatically verify you and apply member benefits based on your e-mail domain name.
Please click the button below which relates to the issue you’re having.
Sometimes our e-mails end up in spam. Make sure to check your spam folder for e-mails from The Payments Association
Most modern e-mail clients now separate e-mails into different tabs. For example, Outlook has an “Other” tab, and Gmail has tabs for different types of e-mails, such as promotional.
For security reasons the link will expire after 60 minutes. Try submitting the login form again and wait a few seconds for the e-mail to arrive.
The link will only work one time – once it’s been clicked, the link won’t log you in again. Instead, you’ll need to go back to the login screen and generate a new link.
Make sure you’re clicking the link on the most recent e-mail that’s been sent to you. We recommend deleting the e-mail once you’ve clicked the link.
Some security systems will automatically click on links in e-mails to check for phishing, malware, viruses and other malicious threats. If these have been clicked, it won’t work when you try to click on the link.
For security reasons, e-mail address changes can only be complete by your Member Engagement Manager. Please contact the team directly for further help.
