Ron Delnevo, Chairman of Cash and Card World, argues that hard currency qualifies as a public utility, so important is it to everyday life.
I have been making the case for a number of years that having only one access point for cash in any community is not an adequate provision.
I reiterated this point at a round table event, sponsored by the UK Payment Systems Regulator In October 2019, only to have someone jump up to claim that having two sources of cash ‘is unlikely to be affordable’.
Can you imagine someone from a water company telling any community that only one standpipe could be afforded to serve everyone locally? Or a power supplier saying that, for economic reasons, there could only be one power point for electricity, located on the village green?
Of course, you can’t. Players in those markets would not dare to place such limitations on supply. But, where cash is concerned, it seems some in the supply chain are prepared to dare to claim that one source of cash is the only affordable option at a community level.
Well, on this occasion, who dares cannot be allowed to win! And here’s why. From figures produced by UK Finance, a financial services trade association,it can be gleaned that British adults who use cash – and more than 90 per cent do – each, on average, spent around £4,000 in hard currency in 2018. That means that a community with 1,000 cash-using adults will, on average, need £4million in cash each year.
Now, the average free-to-use ATM in this country dispenses around £3million in cash each year. So, it is clear that a single, free-to-use ATM is not adequate to meet the cash needs of a community – an urban suburb or a rural village – with 1,000 cash-using adults in the population.
A second local source of cash is required to provide genuinely convenient local cash access. What could this source be? Assuming the existing ATM in the community is 24/7, there are a number of potentially viable solutions:
- A second ATM, either free-to-use or pay-to-use
- A Post Office without an ATM but providing counter access to cash
- At least one retailer or pub able to offer substantial cashback at point of sale
The original ATM must be 24/7 for the potential cash provisions identified above to be adequate. This ATM should also provide deposit and recycling services, to allow both the public and local businesses to conveniently deposit cash. Such smart ATMs can also provide other functionality, helping to replace the local bank branches that have been lost forever.
The need to provide back-up to the single, free-to-use ATM in a community is quite obvious. ATMs are electro-mechanical devices which sometimes go out of service. This can be because of equipment failure or cash outages. The latter can be reduced where deposit/recycling ATMs are installed. The average UK free-to-use ATM is out of service for more than one day a month. This is likely to be longer in the case of ATMs located away from urban conurbations.
Currently, a journey of several miles or more might well be required to find the next available ATM. That is a recipe for poor customer service, forcing the public, who may well prefer to use cash, to use cards or other alternate methods of payment.
We need 2020 vision
Everyone understands these issues, but what we need to see quickly during 2020 is action to put in place readily identifiable solutions for every community in the UK.
This cannot be left entirely in the hands of commercial enterprises. The Government and regulators, including the Bank of England, need to act in a coordinated manner to guarantee convenient access to cash for all. And, while they are at it, they also need to take steps to guarantee acceptance of cash by all businesses that accept in-person payments. Refusing to accept cash is, in my view, an infringement of the rights of individual citizens to use the sovereign currency of their country.
Permanently safeguarding universal, convenient access to and acceptance of cash is not difficult to achieve, but it will require some careful attention from politicians and regulators if it is going to happen.
After Brexit is finally resolved in 2020, it would be an appropriate opportunity to devote some UK parliamentary time to legislation focussed on cash access a
2nd payment choice.
I am delighted to say that the UK Consumers’ Association – operating under its brand Which? – supports the need for just such legislation. And all this needs to happen while everyone still has 2020 vision, because delaying until 2021 could mean it is too late to stop the UK sleepwalking towards the nightmare of a cashless society.