ZURICH, Nov 29 (Reuters) - The use of cash is set to decline in an increasingly digital age, posing risks that the crucial infrastructure to provide "crisis-proof" banknotes and coins could erode, Swiss National Bank Vice Chairman Martin Schlegel said on Tuesday.

A 2020 SNB survey of payment methods in Switzerland found just under half of everyday payments were in cash, making it the most frequently used way to pay. But this had dropped from 70% in 2017, and the downward trend will likely continue, Schlegel said in remarks prepared for a conference in Liechtenstein.

Declining cash usage puts pressure on cash infrastructure because supplying and processing cash is a volume business, he noted. Cash registers, ATMs, secure transport vehicles and facilities are necessary regardless of how much cash is processed.

The number of ATMs in Switzerland is already shrinking, raising the risk that people will take out less cash and use it less to make purchases.

"A reduction in access and declining acceptance could therefore start a downward spiral, with more restricted access, less use and more limited acceptance mutually reinforcing each other," Schlegel said.

Cash offers important advantages, including making managing money clear and simple, allowing everyone to participate in the economy and in social life, and preserving privacy.

It requires little in the way of technical facilities at the point of sale, so is particularly crisis-proof.

"You can still pay with banknotes even when a card terminal has stopped working, when your mobile phone has no reception or when there is no electricity. Cash therefore serves as an important back-up in the event of local – or even widespread – interruptions to card or app payments," he said. (Reporting by Michael Shields; Editing by Susan Fenton)