More than seven million people in the UK were left unable to use their debit or credit card due to an IT or technical system crash in the last year, according to new research from Which?.
In a survey of more than 2,000 people, the consumer champion found one in seven respondents were left unable to use their card due to an outage in the last year - with half of them (49%) saying they couldn’t pay for goods and services at the point of sale as a result. One in 20 people (5%) experienced the problem more than once.
Alarmingly, one in 10 (11%) of those left unable to use their card or make a payment told Which? they suffered a financial penalty as a result and the same proportion (9%) said their credit score was damaged because they missed a bill or payment.
A year on from the Visa IT failure that sparked a Europe-wide payments meltdown, the findings demonstrate the vulnerability of digital banking and payments and reinforcing the need for traditional payment methods like cash to be protected during the transition to a future where digital alternatives become more common.
Today Which? is hosting a major cash summit - drawing together representatives from HM Treasury, banking and payments giants and leading industry experts - to find a way forward after a major review into access to cash concluded that Britain’s cash infrastructure is “on the verge of collapse”.
The government responded to the Access to Cash review with a welcome commitment to protect access to cash and by setting up a strategy group chaired by the Treasury and including regulators and the Bank of England.
Which?’s summit pulls together the major players in government and the industry to look for ways to avoid drifting into a no-cash society, which could leave eight million people struggling to cope.
Which? is calling for the shift to an increasingly digital future to be properly managed and for cash to be preserved while it is still needed, not only for the millions of people in the country who rely on it in their daily lives, but as a much-needed backup when online payment systems fail.
According to Which?’s latest research, one in five (18%) of those left unable to use their card due to an outage said they keep more cash with them and one in six (16%) have started keeping spare cash.
Separate analysis from Which? that looked at FCA records of bank IT outages also reveals that over the last year customers suffered a system failure that led to them either being locked out of their account or unable to make a payment almost every day.
Overall, there were 362 incidents reported by UK banks in the 12 months to 31 March this year.
Almost two million people currently rely on cash for their daily transactions - but despite the combination of a widespread appetite for cash and the high rate of digital payment failures, access to cash is declining rapidly.
Which? previously revealed that the UK lost two thirds of its bank branches in the last 30 years and that over 60 branches continue to close every month. Meanwhile, cashpoint closures have surged, with almost 220 free-to-use machines closing monthly in 2018.
At today’s Cash Summit, Which? will call on the government to deliver on its pledge to protect access to cash with legislation that ensures this important payment method is preserved for all who rely on it and as a vital non-digital alternative for as long as necessary.
Gareth Shaw, Head of Money, Which?, said:
“Digital payments have enhanced many people’s lives - but many still rely on cash and all of us risk being shut out of paying for goods and services when technology lets us down.
“Meanwhile, people across the UK risk being stripped of their ability to access cash through the double blow of widespread bank branch and cashpoint closures.
“The government’s commitment to protecting access to cash must see its new strategy group quickly exploring all options - including legislation - to ensure cash is protected for those for whom it is a necessity and as a vital back-up for when digital systems fail.”
Populus surveyed 2,091 adults in the United Kingdom on behalf of Which?. The survey was carried out online between the 24th and 27th of May 2019. Figures have been weighted and are representative of all UK adults (aged 18+).
Which? IT outage calculations
Which? calculated the number of IT outages suffered by banks by working from FCA data that records information about operational and security incidents. There were 362 incidents reported by UK banks in the 12 months to 31 March this year. However, some incidents may have caused disruptions at more than one bank and been recorded more than once.
Definition of outage as per survey results (one in seven experienced an outage)
“From time to time, financial services companies (e.g. banks) experience IT or systems outages that mean that digital payments or payments made on credit or debit cards are not processed, despite your account being in credit. This can happen to both bank/building society systems as well as card providers (e.g. Visa /Mastercard).”
The estimate for the number of people left unable to use their credit/debit card (7.3 million people) was calculated using the Office for National Statistics mid-year population estimates.
Bank branch closure figures
‘The UK has lost two thirds of its bank branches in 30 years’ - Which? looked at parliamentary records from the House of Commons Library ‘Bank branch closures’ (no. 385, 19 October 2018).
‘Over 60 branches are closing a month’ - Which? has recorded every bank branch closure since the start of 2015.
Cashpoint closure figures
‘Cashpoints are closing at an alarming rate with almost 220 free-to-use machines closing monthly in 2018.’ - Link data
Cash appetite figures
Almost half the population (47%, 25 million people) find cash a necessity that would present real challenges if they couldn’t access it - Figure from the Access to Cash review, chaired by Natalie Ceeney
“..which could leave eight million people struggling to cope” - Access to Cash review figure.
‘Almost two million people currently rely on cash for their daily transactions’ - UK Finance: ‘At the same time there were 1.9 million consumers who mainly used cash, choosing this payment method when doing their day-to-day shopping (although the majority still use other payment methods to pay their regular bills).’