2024 has kicked off with a focus on cash, particularly a series of initiatives to safeguard access to cash.
The results of the public consultation on the Dutch legislation on access to cash has now been published.
The legislation, known as the Cash Payments Act, establishes rules that contribute to the smooth operation of cash payments. The purpose of the proposal is to keep cash accessible, available, and affordable. To that end, it includes the following measures:
Major banks in the Netherlands will be required to provide basic cash infrastructure across the nation. The largest Dutch banks (ABN AMRO, ING, and Rabobank) already do this through their joint venture Geldmaat.
Banks will be required to offer their account holders access to basic cash infrastructure at maximum rates, although banks with fewer than 50,000 accounts will not have to do this.
One risk identified for the continuity of cash service provision is that the transportation of cash is largely carried out by one service provider. DNB will monitor this, and large cash transport companies will have to comply with certain obligations, including periodically reporting on their financial health to DNB.
DNB will be tasked with overseeing compliance with the obligations outlined in the bill. It will be empowered to impose sanctions, such as financial penalties.
New Zealand is a country that has taken an early and proactive approach to designing a payment system for the future. Cash is part of the plan, but with the Reserve Bank of New Zealand (RBNZ) looking to design a novel cash cycle. It is running a range of cash trials in 2024 in locations that have already lost their cash infrastructure.
RBNZ is looking for merchants to have an expanded role in cash distribution. The support could include helping merchants to recycle cash at the point of sale, paying them for cash out services, and facilitating frequent, affordable cash delivery and collections for merchants by consolidation in the cash system based on creating utility entities.
With this in mind, four different approaches will be trialed, all funded by RBNZ:
Recycling cash hubs, with ATM-like devices for cash and coins
Non-recycling hubs, replenished by a CIT
A collective cash service with a collective back office safe, used by multiple merchants
An individual CIT service, whereby merchants contract individually with a CIT.
One driver for these changes is that the cost of cash has moved from commercial banks to merchants, to the extent that they now carry 68% of the overall cost of cash.
The trials will run for 18 months, with the results used to form future policy.
Ireland has introduced legislation to maintain access to cash in the form of an Access to Cash Act. The primary focus is on requiring banks to provide ATMs to a given level. The plan seeks to restore ATM numbers to 2022 levels, when two major banks left the retail banking market, Ulster Bank and KBC.
The goal is to have 95 ATMs for every 100,000 people in border regions and 80 per 100,000 in the capital, Dublin. The government also wants people to have the right to pay with cash for essential services and goods, for example groceries and medicines. All of this is framed in the context of financial inclusion.
The Swedish government is also keen that cash can be used to buy basic necessities. With only 8% of Swedes using cash in 2022, down from 40% in 2010, the government wants to safeguard those who find digital payments hard, a group estimated to be as many as a million people, and to ensure Sweden is able to use cash during a crisis.
A parliamentary panel has been formed to look at how it is possible to safeguard the ability of people to pay cash for certain products, particularly food, fuel and medicines. The panel is to report back by the end of 2024.
Auriga has published a paper on the future of payments. One conclusion is that the UK’s Financial Conduct Authority (FCA) needs to be braver on the regulations it is bringing forward to protect cash. The FCA’s access to cash consultation on protecting access to cash was open until 8 February.
Auriga’s observation is that the FCA’s proposals, while requiring banks and building societies to assess and fill gaps, or potential gaps, in cash access provision, including enabling access to both notes and coins, and access free of charge for consumers with personal current accounts, actually allow them to cut branches and ATMs. They don’t impose a moratorium on closures now, meaning banks can continue to rush through their current extensive closure plans.
The proposals require the banks to undertake their own cash access assessments without any independent oversight. The requirement for banks to respond to customers and others on how the closure is not robust.
Auriga argues that alternatives to a bank branch so often put forward, post office counter cash services, are not a like for like alternative to in-branch bank service. The opening of Shared Banking Hub has been painfully slow just as the closure of branches has been swiftly executed. Auriga suggests that if the FCA wants to reassure the public, they should demand that no branch is closed until there is a hub or something better open to service that community.
The UK’s Federation of Small Businesses (FSB) also believes the FCA proposals on access to cash do not go far enough. It points out that while the proposal requires banks and building societies to assess gaps in access to cash and to act to address those identified against a strict timetable, the UK’s cash infrastructure is shrinking at pace as branches and the free-to-use ATM network close.
The FSB thinks the proposals do not safeguard the ability to use cash, and that they need to include essential services such as local cash deposit facilities and assisted cash services that offer personal interaction. Martin McTague, FSB’s national chairman, is unhappy that the assessments of gaps in access to cash will be left to ‘innumerable individual commercial decisions which, taken together, represent a significant threat to people and businesses’ ability to withdraw, process and deposit cash.’
