The European Payments Council recognizes the importance of ensuring access to cash which is essential to financial inclusion, as expressed in the Payments Service Directive which promotes access of all to a payment account and a minimum set of payment instruments including a cash withdrawal card. In order to ensure access to cash in a convenient and affordable way, participants in the cash value chain pursue two main complementary strategies:
Recirculation can be defined as the process to put again in circulation banknotes received from the public (consumers, retailers, or others) without handing over these banknotes to a national central bank.
A number of contextual factors also support the development of recirculation:
A cashback facility is a service whereby the customer pays electronically a higher amount to the retailer then the value of the purchase for goods and/or services and receives the difference back in cash.
Recirculation can take place at several locations:
In 2016, national central banks within the euro area checked for fitness and authenticity 32.3 billion notes whereas credit institutions and cash management companies checked 33 billion notes. For the first time, recirculation has overtaken central bank processing.
Cash-in-shop, also referred to as a “virtual ATM” is an example of a new cash recirculation method allowing a customer to withdraw cash from their payment count using a mobile application at a participating shop.
The report highlights that there are significant national differences in the organisation of the cash cycle and that there is no “one-size-fits-all” solution. Nonetheless, in spite of a European regulatory framework for recirculation there are still a number of distinct national dispositions that hinder recirculation and the EPC calls for more convergence of national cash cycles, in particular to reduce differences of treatment within the Single Market. Several examples illustrate how recirculation could be further developed; they include: