One of the biggest things the COVID-19 pandemic has impacted is accessibility to cash. An increasing number of businesses have begun to request card payments over cash, in a bid to reduce the spread of the infection. Additionally, social distancing and lockdown restrictions have limited the ability of people who live in small towns and rural areas to seek out their nearest ATMs, which may be located far away.
Link, the cash machine network, revealed that cities like London have experienced as much as an 80% decline in the usage of ATMs, with around 7,200 machines having been temporarily closed since early stages of the pandemic.
The Post Office also recently announced the cutting of one-third of its cash machines over the next eighteen months, which spells bad news for cash-deprived communities. The move is expected to result in the closure of over 600 ATMs by March 2022.
In response, the government has recently rolled out a series of pilot programmes aimed towards increasing access to cash for underserved or vulnerable populations. One such measure has been the trialling of convenience stores and local shops as an alternative to ATMs, via no-purchase cashback, which gives residents the ability to receive cash from these shops without a purchase.
The no-purchase cashback scheme allows residents to put their card in a PayPoint machine and request balance or cash from the till, without making a purchase. Unlike ATMs, this mechanism will enable people to withdraw money in any denomination, not necessarily multiples of £5, £10 or £20 notes.
The program, supported by Link, is currently being trialled 13 small shops in four communities across the UK. It is part of a more comprehensive series of tests that have been rolled out in eight cash-stricken communities across the country. Some of the other measures that have been proposed and are currently being tested are drop-and-go deposit points for small businesses, as well as a financial hub in a church.
Link itself has come under some criticism for cutting the fees it pays to cash machine operators, contributing towards their accelerating decline. Link predicts that of the UK's 42,000 free-to-use cash machines, only the ones located in supermarkets and city centres will survive. In contrast, those in rural areas will no longer be commercially viable.
Indeed, there has been a growing trend towards cashless transactions since the beginning of the pandemic. In August nearly two-thirds of debit card transactions related to the Eat Out to Help Out scheme were contactless, data revealed. Not only does this highlight the impact of the virus, but it also reflects consumers’ increasing comfort with cashless transactions, especially since the increase in the contactless limit from £30 to £45 in April.
The decline of cash-based transactions similarly affects the business of transporting and managing it, which could mean that isolated communities suffer the most. These trials are hoped to provide rural areas with the infrastructure for access to cash, even without the help of ATM networks and bank branches.
Any expansion of the no-purchase cashback scheme will need legislation, and the government has already signalled its intentions towards ensuring access to cash for all.