An unplanned rush towards a cashless society would risk excluding millions of vulnerable people, especially the elderly and those living in rural areas.
Ten years ago, cash was used for six out of every ten payments, but the number of cash payments are now down to one in three. If cash use continues to go down at its current pace, the result would be an entirely cashless society by 2026, according to the Access to Cash Review.
Natalie Ceeney, former chief executive of the Financial Ombudsman Service, who led the report, said a cashless society was not necessarily "impossible" or even "undesirable" but that Britain was not ready.
"Sweden, the most cashless society in the world, outlines the dangers of sleepwalking into a cashless society: millions of people could potentially be left out of the economy, and face increased risks of isolation, exploitation, debt and rising costs," she said.
In Sweden around 15 percent of transactions are made using cash, which is around half the rate of those in the UK. The report said that in Sweden the death of cash is being driven by shops insisting on digital payment.
This process is also being seen in Britain. "As cash is used less, the infrastructure to support it is scaling back. This is leaving small businesses and charities with higher costs to handle cash and leading many to consider dropping it altogether," said the report.
Overall, the report predicts that the most likely outcome is that cash usage will hit a ‘floor’ beyond which people will stop shifting to digital payments. It predicts instead that in 15 years, one in ten payments will be made using cash while 90 percent of payments will be made digitally.