The findings were made by the Access to Cash Review, which said “cracks in the system are showing” – and bank branch and ATM closures are just the “tip of the iceberg”.
It described the cash system as “on the verge of collapse”.
The review has published final recommendations urging the UK government, regulators and banks to act now.
It recommends that a “guarantee of cash access” should be introduced to help the UK avoid sleepwalking into a cashless society – with those providing essential services required to allow consumers to pay by cash.
Cash should be seen as a core part of the UK’s infrastructure and not just a commercial issue, it said.
The report said: “For consumers, we believe that it is both sensible and commercially viable for the banks and regulators to offer a ‘guarantee’ of cash access.
“In part, they can do this by encouraging innovative ways of accessing cash, rather than just protecting increasingly unviable ATMs or, worse, charging consumers for access.
“To protect cash acceptance, we believe that if we can help the banks keep the costs of cash down as its use declines, and to innovate around cash deposit solutions, then there will be fewer commercial incentives for retailers to stop taking cash.”
The review is funded by cash machine network Link, but is independent from it.
Fears over access to cash have been heightened amid bank branch and ATM closures – leading to worries that people’s access to physical money, particularly in rural areas, is disappearing.
But the report said the problem is not just about people being able to withdraw cash – it is also about whether, in future, people will be able to make purchases at places which accept cash payments.
It said the economics of handling and accepting cash could lead to an increasing number of retailers going cashless.
Given these pressures, the review warns against leaving access to cash to market forces, and urges the government and financial services regulators to take action to ensure cash remains viable for as long as people need it.
It said digital payments do not work for everyone and its previous interim report suggests eight million adults would struggle to cope in a cashless society.