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Ministers are under pressure to set-up bank accounts for the estimated 1.2 million people who do not have one during the coronavirus outbreak.

Contactless card payments are increasing during the Covid-19 pandemic because shoppers do not have to hand over used cash.

The transaction limit is being lifted from £30 to £45 to limit customers' exposure to other people.

But people who do not have bank accounts cannot use the system.

Acting Lib Dem leader Sir Ed Davey said: “Over a million of our fellow citizens find themselves without access to a basic bank account in a crisis where electronic cash is king.

“As we all try to minimise our exposure to the virus by using contactless payments, these people find themselves not just financially excluded but risking their health by handling cash.

(Image: Philip Coburn)

“So far the Government has announced no new measures to bring more people into the banking system, which would also help in dispersing financial support – even though an obvious place to start is with the Post Office which the Government owns.

“These 1.2 million people are amongst the most vulnerable members of society, as banks may reject those with a poor credit rating or that lack certain forms of ID.

“The Government must urgently work with the banking sector and the Post Office to end financial exclusion, in order to protect public health and people’s livelihoods from unnecessary risk.”

A UK Finance spokesman said: “The banking and finance industry is working hard to promote financial inclusion for all and currently provides basic bank accounts to 7.4 million customers, many of whom would otherwise be unbanked.

“Providers are using specialist schemes to extend access to basic bank accounts for individuals with no fixed address.

“Online Universal Credit statements are also increasingly being accepted as a form of account opening identification, facilitating access to those without standard ID and address documentation.

“The industry continues to work closely with the government to support all customers impacted by Covid-19, including those who are vulnerable or facing financial difficulties.”

A Treasury spokesman said: “It’s vital that people have access to banking services, particularly during these difficult times.

“That’s why we’ve worked with the biggest banks to set up basic bank accounts for those who can’t access standard ones.

“Since 2016, we’ve helped nearly 7.5 million people to open a basic bank account, and we’d urge those struggling to access banking to look at doing the same.”