UK business owners could soon suffer from a shortage of physical cash, after an industry body announced that 35 per cent of the country’s free-to-use cash machines were under threat.
The ATM Industry Association (ATMIA) made the claim as members of Link– the UK’s cash machine network comprised of high street banks and ATM operators – remained in dispute over how the UK’s 70,000 free-to-use cash points will be funded.
The Link network’s estimated annual running costs of £1bn are currently shared among its 39 members, and the dispute could result in cash machines requiring extra charges, or being closed altogether.
According to a statement released by ATIMA, fewer cash machines could result in “cash deserts” in high streets across Britain. The body warned that towns in the rural South West of England, urban South East of England and Scotland would be hit hardest by the loss of cash points.
Responding to the dispute, MP Andrew Tyrie, chairman of parliament’s Treasury committee, warned that introducing charges on cash machines could have a disproportionate impact on “rural areas and poorer urban neighbourhoods”.
For small businesses based in the UK’s rural regions, the loss of free cash points would be a further barrier to business development, after HSBC recently announced the closure of 62 local branches in response to the changing banking habits of customers.
Research from the Federation of Small Businesses (FSB) in October 2016 claimed that bank branch closures meant that certain rural areas were “literally running out of money”, with Post Offices failing to offer a viable alternative to high street banks.
In the report, Gwyn Evans, chairman of FSB North Wales, said: “Unlike in urban areas, if a branch closes in rural Wales, the business owner may face a 20-mile or more round trip to bank cash.”
With potential customers carrying less cash and relying on electronic payment methods, small business owners could use ATMIA’s warnings as an opportunity to invest in modern cashless payment methods, such as contactless and mobile payments.
A 2016 report from online transaction gateway Sage Pay found that UK businesses lost £9.4bn every year as a result of handling cash.
Cashless payments also have the potential to strengthen productivity levels. The report claimed that over half of small business owners spent at least an hour each week paying cash into a bank or counting money.
Commenting on the research, Seamus Smith, chief executive of Sage Pay, advised business owners to keep up with the pace of changes.
“Our research proves that cash is bad for business. It’s costly and inconvenient, and appetite is growing for more innovative and flexible payment methods,” Smith said in a statement.
“The stats we’ve seen come out of this study are part of a wider trend. We know that cash use is in decline. People are withdrawing cash less and less,” he added.
Sign up to our newsletter to get the latest from Business Advice.