THERE is no doubt that cash remains a crucial payment method that keeps tills ringing for independent shops and small businesses. Indeed, it’s not unusual to see “cash preferred” signs in the windows of local firms.

So, the fact that financial services watchdog the Financial Conduct Authority (FCA) consulted on access to cash is to be welcomed. Yet the Federation of Small Businesses (FSB) has responded to the consultation with some hard-hitting comments, suggesting that the FCA’s proposals lack ambition and don’t go far enough.

The business group says it’s time to “shore up and defend a flexible payments ecosystem which can not only support small businesses and vulnerable communities with cash, but can also help to prepare the infrastructure for a diverse range of payment options, including a digital currency”.

While the FSB concedes that the watchdog’s proposals are a “good start”, its national chair, Martin McTague, said: “Now is the time to be ambitious, in order to build the payments infrastructure needed by small businesses and consumers now and into the future.”
While supporting these proposals, the FSB believes they do not go far enough in maintaining small firms’ freedom to choose cash as a form of payment, which it sees as “inseparable from the broader cash services ecosystem”.

A small business, Mr McTague pointed out, “must be free to choose which payment options it wishes to accept, including cash”, rightly noting: “To enable this, it’s vital for the infrastructure required for cash to remain available in all areas.”

The FSB believes that consultation “overlooks essential services such as local cash deposit facilities for small business owners, and assisted cash services that offer personal interaction”. It states: “Moreover, the FCA’s proposed cash access request scheme is insufficient, as it puts businesses’ and consumers’ concerns effectively as a last resort and is unlikely to stem the tide of bank closures and the decline in cash infrastructure.”

Mr McTague expresses concern that the FCA’s proposals won’t be enough to pause the trend seen in recent years towards fewer free cashpoints and bank branches. “Cash is vital as a competitor to other forms of payment, and as a payment option when digital systems go down, or in areas with poor reception,” he noted.

He also points to vulnerable groups such as elderly people who are more likely to rely on being able to use cash, and suggests that banking hubs and other solutions to access cash may also be the “best opportunities for building digital currency infrastructure in the future”.

The FSB is correct when it says that banks “must be held to higher standards when considering the impact of their closures on access to cash” and “cash infrastructure should be considered a public good”.

But branches continue to close. Virgin Money, which owns the former Clydesdale Bank, earlier this week declared it is on track to make annual savings of around £200 million, following its latest round of branch closures. The bank has slashed its branch network by around 30%, leaving just 91 branches across the UK.

Cash remains king for many small businesses and from a personal perspective, it’s always handy to have cash to pay the window cleaner and pop into charity donation boxes. It will be interesting to see how this plays out.