Around one in six people say cash is still a necessity despite the growth in new ways to pay, a report has found.
Some 17% of people believe cash is an economic necessity, according to the interim findings of the Access to Cash Review.
The initiative is being funded by ATM network Link, which said the review is independent from it.
It was set up in July with the aim of understanding consumer needs and the implications for cash access requirements over the next five to 15 years.
Cash use has declined rapidly in recent years, as alternative ways to pay such as contactless payments have seen a rapid growth in popularity.
But some people still rely heavily on using notes and coins and there have been concerns that bank branch and ATM closures could make it harder for people to access physical money.
Three quarters (74%) of people worry that going cashless would take away people’s right to choose, while 72% believe that vulnerable groups of people would be more likely to get scammed or defrauded if this happened, the review found.
Chaired by Natalie Ceeney, a former chief executive of the Financial Ombudsman Service, the review warned that if the UK moves too fast towards being “cashless” without including all parts of society, millions of people could be left behind.
Rural communities with poor broadband and mobile connectivity could be particularly at risk by restricted access to cash, as could people juggling tight budgets who use cash to help them stay out of debt, the review said.
Cash can also give financial independence to people in a difficult or abusive relationship.
The research also found people are quite evenly split on whether there will be a cashless future in their lifetime.
Just over four in 10 people believe it will happen, compared with 38% who believe it will not.
Ms Ceeney said: “The decline in the use of cash has been dramatic, and with rapid technology development and adoption this trend will continue.
“But for millions of people in the UK, cash is not a choice, it’s a necessity.
“If we don’t plan carefully for a world of lower cash – in other words, if we sleepwalk into a cashless society – millions of people will be left behind.”
So far, the review has gathered evidence from more than 120 organisations from across the leisure, retail, financial, charity and business sectors and has travelled the country taking evidence from people.
An online survey of 2,000 people across the UK was also carried out.
The review will publish its full report and recommendations in early 2019, with suggestions for Government, regulators and others.
Martin Lewis, founder of MoneySavingExpert.com, said: “Many, especially the more affluent and technologically savvy, now live mostly cashless lives.
“That’s exactly why protecting access to cash is so important.”
Ben Broadbent, deputy governor for monetary policy at the Bank of England, said: “We believe it is important the public has choice in how they make payments.
“The UK has seen a decline in the use of cash.
“However, we also think that cash is likely to remain a very important part of the payments landscape for a long time.
“It is true that an unmanaged decline in cash use could limit choice for people and businesses who prefer to use cash.”
Nicky Morgan, chair of the Treasury Committee, said: “The future of cash in this country is a hugely important issue.
“With bank branches and ATMs closing, and consumer preferences changing, it’s right that this topic is being rigorously analysed before events overtake us.”
Jenni Allen, managing director of Which? Money, said: “It is vital that everyone has the option to use cash for as long as they need to – and continuing the unplanned drift towards a cashless society is not an option if we are to protect almost half the population for whom cash is a necessity.
“The Government should urgently give a financial regulator or the Bank of England a duty to protect access to cash and examine the issues driving change in the payments sector, to ensure no-one is left behind as digital payments grow in popularity.”
Eric Leenders, managing director, personal finance at UK Finance, said maintaining access to cash is vital to ensure no customer is left behind.
He said: “From over-the-counter withdrawals through 11,500 Post Offices and cashback from retailers, to investment in ATMs and mobile bank branches to reach more rural communities, the finance industry is using a range of solutions.”