How the Pandemic Has Impacted the Use of Cash

We are joined by Marc Terry, International Managing Director at Cardtronics. Cardtronics is the UK’s largest ATM operator, and Marc has been sharing some insights into how the pandemic has impacted the use of cash, as well as the importance of maintaining free access to cash.

Q: How has cash been impacted by Covid-19?

Marc Terry (MT): As lockdown restrictions ease, the corresponding surge in cash withdrawals is showing that consumer demand for cash hasn’t really been affected at all. Cardtronics’ data shows that while at the peak of lockdown, we did see a significant drop in the number of transactions we processed, cash transaction values actually increased as people compensated for being unable to get to ATMs as often. According to figures published by LINK, we are now back up to nearly 70% of transaction volumes compared to this time last year (and the upward trend continues), with over £1.5bn being dispensed across the UK every week. Last week alone there were 21 million cash withdrawals. We predicted that cash would climb back to almost what it was pre-lockdown, and we remain confident that our forecasts are accurate.

Many people rely on cash during times of crisis like this. The pandemic has shown that the popularity of cash will endure as long as the industry continues to provide access to it. There will always be a core demographic of the population who chose or are forced to rely on cash regardless of alternative fintech payment options.

Q: What do you think is the future of cash?

MT: The Government says that cash remains a vital payment mechanism for many people across the UK, and I agree. This is why I was very pleased to see the Chancellor commit to protect access to cash in his spring budget. The future of cash is the future of choice. Protecting citizens’ rights to choose how to pay is crucial to a healthy society and economy.

There has been an influx of innovative fintech platforms, all of which claim to be the answer to changing the way we pay. But none of them are able to displace cash entirely and they come with the extra burden of their own consequences. Just look at the Wirecard fiasco and the recent banking outage at TSB both of which left customers unable to access their own money. There is always the risk that technology will fail you at the vital moment. Cash is the bicycle of payments – a flexible solution and more suited than others for certain circumstances but, more importantly, available to everybody.

Consequently, as long as the government and the industry supports widespread access to cash, it will continue to be a crucial part of payments mix. However, in order to support widespread access to cash, we must find a way to create and manage a sustainable ecosystem that moves away from the banks’ current agenda of undermining the ATM network. It must reflect the UK’s less-cash, but not cash-less, environment.

Q: Why is it so important to maintain free access to cash?

MT: Cash is a vital part of our payments ecosystem, with £1.5bn still being withdrawn weekly, and millions of people relying on cash every day, cash keeps both the local and national economy healthy. The media hype about the death of cash is ridiculous when you consider that one-third of all high-street payments are still in cash. Retailers of all shapes and sizes benefit greatly from the flexibility that cash provides. If cash were to disappear, the high street would inevitably suffer. Moreover, according to Natalie Ceeney’s Access to Cash report in March 2019, over 8 million adults would struggle to cope in a cashless society.

Inevitably, as free access to cash disappears, consumers end up paying more. According to Which? banks save £120m a year by removing access to cash for their customers, of which, £104m is passed directly on to the consumer. While the banks may not want to maintain free access to cash, it is vital in a functioning society that everyone has the freedom to pay for goods and services how they choose - be that cash, digital payment, or some other method. Payment choice for all must be protected.

Q: What should the industry be doing to maintain free access to cash?

MT: ATMs are the only way free access to cash can be maintained at scale. Substitutions like over-the-counter cash withdrawals at the Post Office or cashback initiatives in shops are simply not able to support the massive cash volumes that go through the ATM network. We are therefore calling on LINK, the banks and the government to reverse the cuts LINK made to the fee that banks pay ATM operators for cash withdrawals made by their customers. Once this is done, it gives the industry time to work collaboratively to address this issue and find a sustainable solution that protects the future of cash access for all. It is amazing to me that the PSR and HM Treasury are prepared to stand by and watch as the banks drive the UK towards a cashless economy that nobody wants.

A sustainable ATM infrastructure allows for innovation that will support local economies. For example, we are working with fintechs to find ways to continue to provide cash for the most vulnerable during difficult times like these. Cardtronics recently launched a new cardless solution with Pin4, which enables businesses, charities and government agencies to deliver cash to recipients’ mobile devices for immediate collection at a participating ATM. The recipient is sent a text message with the details to be input at any Cardtronics Pin4 enabled ATM to obtain the cash. The recipient doesn’t need a card or bank account, just a basic mobile phone and access to a Cardtronics Pin4 enabled ATM. Innovations such as these are crucial to maintain free access to cash and make sure no-one is left behind.

I do not believe that the answer is all about cash. It’s about balance and providing choice. Tomorrow’s economy needs the flexibility that a rich and diverse payment ecosystem can bring. And this must include sustainable access to cash for everyone.

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