Cash is king for older people

  • Hilary Cooper
  • 16 July 2019
  • Blog

Access to cash is essential for older people, according to Hilary Cooper, finance expert and Senior Associate of independent think tank The Finance Foundation.

Older people are highly dependent on cash for daily purposes and for paying people who do work or shopping for them. Our research showed that, in contrast to younger people’s behaviours, half of all older people aged 80 or above draw out cash at least weekly and 80% at least monthly.

While some things are changing around person to person transactions – for instance, it is increasingly possible to pay tradesmen at home via electronic devices – this is not the case for payments to neighbours or for shopping and other errands which feature prominently in older people’s lives. A cashless transfer in this case would require the use of internet or banking apps that so many older people do not access.

Similarly, while older people can now much more easily buy their cup of tea or newspaper through a low value contactless payment with a card, many still prefer to use cash for their purchases, at least in part, so that they can keep track of where their money is going.

Meeting the need for cash and other physical banking services in the future requires an effective infrastructure. Until relatively recently, the bank branch network and the ubiquity of free to use ATMs adequately fulfilled this function. The rapidly contracting branch bank network and the prospect of future reductions in the number of ATMs, or charging for cash withdrawal, is obviously changing the landscape.

The current agreement between banks and the Post Office network, with its wide reach of outlets, offers a potential solution – although it has limitations for some banking functions such as accessing savings accounts or setting up direct debits. There are also signs that cost pressures are making it uneconomic for many post offices to continue. 

There is a need to consider whether a different type of infrastructure could be developed for delivering cash directly to people’s homes in the future, rather than providing facilities that they have to travel or be taken to. People can already receive foreign currency delivered by courier or simply through the postal system – maybe we should think about whether this could be extended in a safe and cost-effective manner to ordinary cash withdrawals. 

If we do not find a way of ensuring that older people can carry out routine financial transactions, even those as simple as paying a neighbour for shopping, then all the other support we provide to them with other daily tasks may not in the end be sufficient to enable them to continue to live independently. 

If this ends up pushing people into earlier than necessary institutional or other dependency, it will be costly for them, costly for their relatives and costly for society as a whole.

Read more from The Finance Foundation’s submission to The Treasury Committee’s inquiry on Consumers’ Access to Financial Services.