With access to cash threatened by bank and cash machine closures in the UK, the Government is trialling purchase-free cashback in local shops to secure continued, widespread availability of cash. Across Europe, cashback is also growing in prominence as it is introduced in more countries.
Providing continued access to cash serves people who value payment choice, the privacy and immediacy of physical money, its tangibility when budgeting, and the significant part of the population who is unbanked or underbanked and relies on cash. It also benefits small businesses with narrow profit margins, for whom the added transaction costs of cashless payment methods seriously impacts revenue.
Originated by British retail chain Tesco, cashback services were introduced to cash-loving France in 2018. This was a much-needed move, given there is an estimated 850 cash machines per million people there, compared with countries such as Luxembourg, Portugal and Spain where the figure is around 1,000. Austria was slightly ahead, with cashback introduced in early 2017.
In Germany, cashback in shops has become a popular form of cash withdrawal, supported by reductions in the required purchase amount over the past three years. The European Payments Council notes ‘cashback is a positive answer to improve the efficiency of the cash cycle by reducing the circuit of banknotes’.
In Britain, as in most countries, the distance people have to travel to access cash varies widely depending on where they live. A recent University of Bristol study showed Scots typically have to travel twice as far to reach a cash machine as Londoners. This leaves gaps in provision, especially for rural communities, that the UK Government is seeking to address.
