New proposals to protect cash suggest cashback at shops without purchase

A customer paying cash money for fudge in Borough Market, London
Photo: iStock

The government has set out plans to protect the UK’s future cash system and ensure people have easy access to cash.

The proposals announced today (15 October) include offering cashback at shops without consumers having to make a purchase.

“We know that cash is still really important for consumers and businesses – that’s why we promised to legislate to protect access for everyone who needs it,” John Glen, Economic Secretary to the Treasury, said.

“We want to harness the same creative thinking that has driven innovation in digital payments to maintain the UK’s cash system and make sure people can easily access cash in their local area.”

The government has also issued a call for evidence, which will run for six weeks, seeking views on its approach to the legislation promised in the March 2020 Budget to protect access to cash and ensure that the UK’s cash infrastructure is sustainable in the long-term.

By making cashback without a purchase widely available from retailers of all sizes in local communities, the government said the cash infrastructure costs could be reduced as there is less need to transport and distribute notes and coins via cash centres.

Last year, cashback has been the second most used method for withdrawing cash in the UK behind ATMs, with consumers receiving £3.8 billion of cashback when paying for items at a till.

The government plans to scrap the EU rules, which currently make it difficult for businesses to offer cashback when people are not paying for goods, once the transition period ends on 31 December.

The Association of Convenience Stores (ACS) has welcomed the proposals, noting that more than two thirds of convenience stores (68%) already offer cashback to customers according to its Local Shop Report 2020.

However, James Lowman, ACS chief executive, cautioned that cashback without a purchase might not work for all retailers.

“We welcome the Government’s focus on securing access to cash for the long term, as cash remains an essential and widely used method of payment for millions of people,” Lowman said.

“Providing cashback without a purchase might work for some retailers, but may not be viable for everyone and cannot be seen as a replacement for the UK’s ATM network. We are watching with interest trials of new approaches to offering cashback.”

Under the government proposals, the Financial Conduct Authority would also be given overall responsibility for the UK’s retail cash system to protect consumers and SMEs.