Cash Talks EP1: Access to Cash

• The Challenges Consumers Face in Accessing Cash – Anne-Sophie Parent, Age Platform Europe and co-chair of the Euro Retail Payments Board working group on access and acceptance of cash.
• Findings of the Euro Retail Payment Board Report on Access to Cash – Diederik Bruggink, Head of Innovation and Payments at the European Savings and Retail Banking Group and co-chair of the ERPB working group on access and acceptance of cash.
• The Future of the Cash Infrastructure in the Netherlands – Roel van Anholt, Programme Manager, De Nederlandsche Bank.
• Initiatives to Ensure Access to Cash in the UK, Graham Mott, Director of Strategy, Link Scheme.

Watch the recording below or download the presentations at the bottom of the page.

Below are the answers to the questions which were submitted during the webinar.

Jimmie Franklin: Are there any countries in Europe that you think are leading the way for access to cash?

Roel van Anholt: Thank you for the question. It depends on what you think is ‘leading’, some countries have chosen to impose legislation while other countries try to make agreements together to sustain access to cash. In countries where cash is still king, safeguarding access is not necessary.

Anne-Sophie Parent: Countries which have set up a platform or forum where the future of cash is discussed with all stakeholders including consumers and representatives of consumers with special needs (older persons, persons with disabilities, non-tech consumers, etc.) have more chance to get to sustainable and affordable solution to ensure access to cash to all, whether they introduce legislation or ask the demand side to commit to clear targets regarding availability and capacity of the cash infrastructure (see section 5.1.3 or the ERPB report).

Graham Mott: Each country has its own requirements which are a mixture of how cash is used and the geography and how the banking industry is organised.  It is interesting how different countries approach cash acceptance, some seem to mandate it, others it is left to the retailer, at least at present.

Jens Eberhardt: Closing of branches/ ATM locations will be not enough if cash in circulation declines further. Do you think that the handling market (CB/banks/CiT/ retail) will be willing to invest in smarter solutions in the future as well? Making the processes more efficient?

Roel van Anholt: Thank you for the question. Yes, but first a fully-fledged backup solution should be implemented to guarantee continued functioning of the payments system in case of failure of card payments. Innovations in automated cash register systems at POS may thereafter be able to replace ATMs with services like cashback and cash-in-shop, but only in those regions with few transaction and only at merchants with sufficient supply (cash payments) to avoid having to order cash deliveries to be able to provide these services.

David Tidmarsh: Besides the studies mentioned here, what other countries or central banks are looking into the access for cash?

Guillaume Lepecq: The list below is not comprehensive, but here are some recent intiatives:

• Since January 2021, a new law in Sweden requires banks to provide an adequate level of cash services.
• In the UK, the government announced plans on 15 October 2020 to protect the UK’s future cash system and ensure people have easy access to cash.
• The Reserve Bank of Australia launched a stakeholder consultation in November 2021 on what changes might be required to ensure that banknote distribution is effective, efficient, sustainable and resilient – both now and into the future.
• The Reserve Bank of New Zealand’s ongoing Future of Money initiative seeks feedback on issues facing the cash system and explores options to achieve greater efficiency and resilience.
• In July 2021, a memorandum signed by the Bank of Lithuania and financial institutions, aims at doubling the number of localities with cash withdrawal facilities.
• The Swedish Riksbank announced in March 2021 the opening of two new cash centres.
• In February 2021, the regional government of the Valencia region in Spain has increased its subsidies for the deployment of ATMs in 135 small towns without banking branches.

Jozef Vrana: How are the costs related to operating cash at the till (interchange fee, service fee, other fees) distributed amongst the participants (banks, retailers, consumers, schemes)?

Roel van Anholt: Thank you for the question. In the Netherlands, if cashback (=with a purchase) is provided at the till, the merchant does not pay or receive any additional fee (the transaction is just an ordinary POS-transaction with a fixed (regardless of the amount) interchange fee flowing from merchant (acquirer) to the bank (issuer)). Cashback for a Cash-in-shop does not exist in the Netherlands.

Astrid Mitchell: Anne-Sophie – did the adoption of contactless during the pandemic lead to issues of trust?

Anne-Sophie Parent: During the first Covid-19 wave many consumers were encouraged by merchants to use contactless as much as possible, and this has increased the number of contactless users. This has not solved the issues of trust and the concerns that consumer groups had before the pandemic for ex. with the lack of transparency of their retail payments statements where often consumers do not recognize the merchant’s name or the place where they made the transaction. Consumers who are used to rely on cash to manage their budget deplored having greater difficulties to remember what they had spent and where.

John Winchcombe : Graham and Diederik, do you measure the volume and value of cashback/cash at till withdrawals?  What is the uptake?

Anne-Sophie Parent: The WG collected input on that question from various stakeholders. To summarize the WG findings: “Cashback and Cash-in-Shop only play a minor role in terms of access to cash. Based on the limited available data, NCBs estimate that CB turnover only reaches 1 – 3% of the POS transactions, and CIS turnover is even much less compared to the ATM withdrawals.” (see section 5.4.3.1.1 of WG report)

“According to EuroCommerce, if merchants decide to offer CB/CIS as a way to maintain cash services to the public, they should be compensated accordingly to make it economically sustainable for them, as these services entail additional costs and security risks.”(section 5.4.3.1.5 of the ERPB report)

Diederik Bruggink: as mentioned before, there is limited available data. Also, apparently, not all CB/CIS transactions are reported as such (but rather as normal purchase).

Graham Mott: The new service has been increasing quite quickly as more terminals are put online although cashback as a whole only accounts for less than 5% of total cash acess

Markus Hoh: Dutch cash cycle: who is doing the rest 20% of the CIT business? The state, banks themselves or others?

Roel van Anholt: Thank you for the question. We have two smaller CiTs in the Netherlands who cover the rest of the market: ‘Smart Safe Company’ and ‘VTS Nederland’.

Lorcan Lyons: Do any ATMs in the Netherlands allow cash deposits? There is a large fee if you try to do that in a bank branch, if they accept cash at all.

Roel van Anholt: Thank you for the question. At bank branches in the Netherlands there are no services anymore to withdraw or deposit cash. Larger companies can order a CiT to pick-up their revenues earned in cash or deposit cash in a ‘night safe sealed-bag deposit terminal’ or at a recycler, which is an ATM with both withdrawal and deposit functionality. Both the night safes and recyclers are deployed by Geldmaat. Typically smaller companies deposit their cash at Recyclers only.

Astrid Mitchell: Roel, has the removal of ATMs in bank branches reduced traffic in those branches?

Roel van Anholt: Thank you for the question. Yes it did. Before ATMs were removed from branches there were quite some people still preferring to withdraw/deposit cash in those bankbranches. What we typically see in the Netherlands is that the removal of cash services from branches allowed banks to further downsize their branch-networks as well.

Lahcen Hadouni: Roel, has the DNB considered what role can cash fintechs play in the provision and the availability of cash?

Roel van Anholt: Thank you for the question. We are aware of fintechs providing cashback and cash-in-shop services thoughout Europe, and are looking into these concepts. Besides those kind of fintechs we have not found other players who participate or have the ambition to participate in the Dutch cash cycle.

Indra Nereta: What agreement is planned to be concluded in the Netherlands, namely what is planned in this document? Who would be the addressees of this document, who would have any responsibilities? What would be the content of these responsibilities? Several countries impose a distance criteria for ensuring access to cash. In Netherlands, I think this is not a problem yet. Do you plan to set any criteria for the number of ATMs?

Roel van Anholt: Thank you for the question. In my opinion, the reason why access in terms of distance is not an issue in the Netherlands is because we have made the agreement to keep it at a high level with parties a long time ago. I presume you refer to the covenant when you say ‘this document’. The covenant will be signed by the central bank, the biggest commercial banks, representatives of merchants, consumer organisations, as well as service providers (Geldmaat+Brink’s). We try to agree on all of the responsibilities in the covenant, I cannot tell you (yet) how these responsibilities are set since we are still negotiating.

David D’Arcy: Roel, can you discuss what emphasis is placed on lodgement facilities in the covenant arrangements – are there similar provisions such as distance etc? Thanks!

Roel van Anholt: Thank you for the question. In the covenant, we intend to look at driving distances from merchants for lodgments, as these services are primarily offered for business instead of for consumers.

James Shepherd-Barron: Graham, is there a correlation between cash use and the ‘fear factor’ (of fraud/scamming) A-S talked about? Logic would suggest one would rise in relation to the other. If LINK doesn’t look at this, do you think the cash industry should?

Graham Mott: The fear of fraud seems to be one of the barriers to some people using digital payments, particularly older users.  However we have not quantified it.  

Lesego Ndaba: Graham, what do the competition authorities say about the bank hubs? does it not reduce competition?

Graham Mott: They are fully involved in the process which as you say, does have competition law implications

 Jane Cooper: Graham, is the idea to always have access to cash so people always have it as an option even if all sections of society use digital alternatives? Or is access to cash part of a transition until everyone is on board with digital payments?

Graham Mott: At present there are still a significant number of people using cash so cash access remains important.  Whether we ever move to a position were cash use declines to zero seems unlikely, at least in the short term.

David D’Arcy: Graham, what underpins the CAG and its cooperative arrangements ? Legislation?

Graham Mott: Legislation may in future but at this stage it is agreements through the participants and the regulartors (PSR and FCA) are closely involved.

Markus Hoh: UK cash cycle: is “cash at till” counted as an ATM transaction or statistically counted in the same manner or added to ATM statistics? How to evaluate properly the cash access when ATM not the only “point of access”?

Graham Mott: They are recorded separately.

Jakob Rotte: LINK is a very interesting approach to maintain the access to cash in the UK. Could Graham tell more about LINK’s background, in particular why do the UK banks cooperate this way, whereas they can be expected to cut costs and improve their profits as much as possible.

Graham Mott: LINK was formed back in 1980 and from 2000 has been the UK’s domestic ATM Scheme.  This means they are used to using LINK as a vehicle for cooperating,  In terms of the new programmes, while there are costs they are lower if they cooperate rather than go alone.