Propping up the bar at the Brewery Tap pub in the Hertfordshire village of Furneux Pelham, I see that a quiet revolution is taking place.
After handing over my debit card, I am presented with a foaming pint of the local Mad Squirrel Sapling ale – along with four crisp £20 notes.
I am raising a glass to a brave new ‘cashback’ initiative where pubs and shops could soon be able to hand out money in communities abandoned by banks.
This initiative is expected to be unveiled by the new Chancellor Rishi Sunak in his first Budget on March 11. It will include rules that force banks to foot the bill for offering such a cashback facility rather than the local businesses themselves. A cashback service costs 40p for every £10 handed over.
We’ll drink to that: Toby Walne enjoys a pint at the Brewery Tap where landlady Lucy Bonner says the cashback scheme will ‘be embraced with open arms’
It will mean that where there are no longer any banks or cash machines, you will be able to go into a local pub or shop and ask for cash in exchange for payment with a bank debit card or cheque.
Previously such transactions could only be done at the discretion – and cost of – a landlord or shopkeeper. The initiative would also mark a major victory for The Mail on Sunday Keep Our Cash campaign – free cashback was one of our key demands.
The reason banks will be ordered to pay for this cashback service is because they have a social obligation to provide access to money – one they currently fail to fulfil.
In the past couple of years alone, 9,000 cash machines have disappeared from the high street while more than 6,000 banks have shut over the past decade, culling the branch network by more than a third.
Businesses will be responsible for ensuring they have enough money for cashback in their till but a further boost to customers is that cashback will be offered without any need to buy anything.
Pub landlady Lucy Bonner embraces the idea to fight back against the greedy banks that have been withdrawing their services to save money. She says: ‘The banks have done enough harm to communities trying to squeeze every penny out of us – it is now time for us to take back control and provide some of the bank services that people actually deserve.
‘If the Government supports the cashback change, we will welcome it with open arms. It should be good for everyone because it will be easier to get money out and it will also bring in more people to enjoy a drink.’
In the past couple of years alone, 9,000 cash machines have disappeared from the high street while more than 6,000 banks have shut over the past decade
The 23-year-old says about a fifth of all her transactions still involve cash – and that she gets about half a dozen requests each week for cashback. Currently she has to refuse because it costs the pub money. But with this change, she says it will be easy to offer the service. The pub will simply keep back more cash takings as float in case someone wants to use the cashback service.
Since the last bank, Barclays, pulled out of the closest town of Buntingford, five miles away, the next nearest access to cash machines and banks for this 600-strong community is Bishop’s Stortford – a 14-mile round trip. There is an irregular bus service so most people use a car.
Enjoying a lunchtime drink and chat with friends at the pub, 42-year-old Melissa Rippon believes the cashback service would be a godsend. She says: ‘We must ensure that cash is kept alive for future generations. Without access to money people will struggle to understand the concept of budgeting and lose the option to handle banknotes and coins. Cashback gives us freedom of choice.’
Natalie Ceeney, author of the Access to Cash Review, is in favour of legislation to allow shops and pubs to give cashback
Pushing for this change has been Natalie Ceeney, author of last year’s independent Access to Cash Review and a former boss of the Financial Ombudsman Service.
She says: ‘The legislation to allow consumers to get cashback is long overdue. The change would allow all shops and pubs to provide cash access – supporting their business at the same time. The Government has recognised it must step in when a market fails.
‘A clear case for this is to give banks an obligation to provide cash access to their customers and cashback provides a solution where others fail.’
Although banks are due to foot the bill for these cashback charges, it is estimated this will only cost the industry £20million a year. This is a relative bargain compared to the £700million a year it spends on keeping open loss-making branches and ATMs in the most vulnerable communities.
With £193billion of cash a year taken out of ATMs, there is still strong demand among people for money. According to the Access To Cash Review, eight million people say they would struggle without cash.
John Howells, chief executive of cash machine network Link, says: ‘Offering cashback is going to be a cheaper alternative to banks than running branches and cash machines that lose money – and supports people that otherwise might have to travel miles to access cash. It is a win-win situation.’
Link has pledged to open 200 ATMs this year. But this is scant compensation considering the 500 cash machines a month being removed. According to consumer body Which?, a quarter of the dwindling 60,000-strong network of surviving ATMs now charge up to £2 to access money.
According to the British Beer and Pub Association (BBPA), the number of pubs serving ale has fallen by more than 20 per cent since the turn of the millennium
A key reason cash machines are being taken away is that each time a consumer uses their debit card at a free-to-use ATM that does not belong to the bank that issued their card, an ‘interchange fee’ is paid by the bank to the cash machine operator.
This used to be 25p per withdrawal but is being reduced to 20p in 2021, so ATMs are less profitable. Although a bank might have to pay 4 per cent of any transaction amount for the cashback service at a pub or shop, this is still a lot less than running an ATM machine that costs at least £30,000 to install.
According to the British Beer and Pub Association (BBPA), the number of pubs serving ale has fallen by more than 20 per cent since the turn of the millennium – tumbling by 13,200 to 47,600. So the move to encourage cashback at the bar is greeted as a great way of attracting more customers.
Nick Lawrie, a spokesman for the BBPA, says: ‘Pubs are surviving on fine margins and need all the help that they can get – and this is a welcome idea.’
The Association of Convenience Stores represents 45,000 local shops across Britain. It also says it would welcome the proposed cashback initiative.
But the change does not halt our slow sleepwalk towards becoming a cashless society. Bank industry body UK Finance believes only 9 per cent of all payments will be cash based by 2028. In 15 years, banknotes and coins might be obsolete.
Joe Patten, of consumer body Which?, fears offering cashback in pubs and shops will let banks off the hook – enabling them to provide their minimum service obligation to provide access to cash for customers with a cut-price way out. He says: ‘Although it might provide a solution, it does not halt the closure of banks and cash machines.’
There are also concerns a Government pledge to ensure the surviving network of 11,500 post offices – where there is free access to cash – allows banks to avoid responsibility of their duties.
A spokesman for UK Finance says: ‘We believe a cashback service offered by retailers has an increasingly significant role to play and helps support the provision of cash in local communities. We will monitor and support any cashback initiatives within local communities.’
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