Cashing in on campaign momentum: the need to ensure access to cash is protected.
Many ATM operators and consumers breathed a deep sigh of relief this month when LINK, the U. K’s primary ATM network, announced it was cancelling one of its planned cuts to interchange fees and postponing the fourth and final one. Such news was heralded as a triumph for defenders of cash such as Which?, whose ‘Save our cashpoints’ campaign was just one point of pressure placed upon LINK to halt its controversial changes.
However, with nearly 3 million people in the UK still almost entirely reliant on cash,[1] protecting access to it is vital to maintaining their financial stability. Therefore, the survival of cash cannot be dependent solely on the whims of LINK. Access to cash is particularly important for people on low-incomes, as many of these people often find managing their weekly budgets much easier via cash transactions than through contactless payments or other forms of card. Furthermore, poorer communities are disproportionately affected by loss of ATMs – currently more than 300,000 people from Britain’s poorest areas already live further than 1km (0.6 miles) from free-to-use cash machines[2].
Such a lack of ATMs means than these people face a fee from 75p to £10 to withdraw their money[3], which for those already struggling to make ends meet will make a noticeable dent in their finances and could be a decisive factor in staying afloat; financially speaking. Therefore, the role of cash as a necessary (if secondary) form of finance needs to be embedded and monitored with transparency, by an independent body.
The Community Investment Coalition (CIC) has long advocated for the protection of access to cash, through such facilities as branches and ATMs, and campaigns for (among other things) physical access to banking facilities. We do this because we believe they are essential to ensuring that every adult, household and business has access to fair and affordable finance tools (read more about this in our Community Banking Charter). However, although pressure from concerned parties like CIC and Which? have certainly pushed change in the right direction, more concrete steps must be taken to ensure that these efforts aren’t a temporary measure, but rather that we use the momentum it has created to advocate for real cash security.
It’s important to emphasise that calls to protect access to cash aren’t (necessarily) done to undermine the role of digitalised payment. On the contrary, cashless payment options have been welcomed by many consumers, playing innovative and often vital roles in their lives by making it easier and quicker to carry out transactions. Nevertheless, just because cashless payments are becoming more prominent, cash hasn’t become obsolete. The perils of relying on one single payment method can be illustrated by the weaknesses of digitalised financial systems.
For example, there is a risk of card provider failures, such as the recent Visa outage. In June 2018, a hardware failure of Visa’s payment system left millions across Europe unable to pay for goods and services[4] demonstrating that there are, at the very least, a few ‘chinks in the armour’ of one of the most well-used cashless payment system. Moreover, cyber-attacks are on the rise across the UK. Over £1bn was stolen from bank accounts through credit and debit card fraud in 2017, an increase from 2016.[5]
Access to cash provides a means of mitigating the risk of these events occurring. Unlike the vulnerabilities of Visa transactions, cash does not ‘crash’; it is self-sufficient and does not rely on external data centres for its use. Furthermore, few of us carry more than a fraction of the money that we would have in our bank accounts, meaning that while cash can still be stolen, the overall financial effects of cash theft are often much less severe than those arising from cyber-attacks on our bank accounts or, say, misplacing our credit cards.
So, while we should certainly embrace LINK’s latest decision to postpone cuts to interchange fees, a great deal more must be done if cash is to become well and truly protected. Norwegian philosopher Christian Lous Lange made the point almost 80 years ago that “technology is a useful servant, but a dangerous master” and today this point rings home. While financial technology certainly has its uses, by limiting the options people have as to how they access their money – i.e., by closing ATMs and branches – banks are taking away choice and where choice ceases to exist, so does true autonomy. In such cases, where consumers are increasingly being forced to operate without cash, are consumers still the masters of financial technology, or is it perhaps the other way around?
The possibility of such a case is especially concerning considering that a cashless society is far from a risk-free one. In any case, a secondary option still exists, if we want it, to mitigate such dangers and cater for the preferred payment method of nearly 3 million consumers and access to it must be protected. It’s small, light and usually fits into your wallet.
[1] https://www.bbc.co.uk/news/business-43388662
[2] https://www.telegraph.co.uk/finance/personalfinance/bank-accounts/10546744/Lack-of-free-cash-machines-in-Britains-poorest-areas.html
[3] https://www.theguardian.com/society/2014/jan/01/poor-people-free-cash-machines
[4] https://www.theguardian.com/money/2018/jun/01/visa-card-network-crashes-and-sparks-payment-chaos
[5] https://www.independent.co.uk/news/business/news/credit-debit-card-fraud-billion-stolen-identity-uk-britain-banks-protection-security-a8073586.html