A recent announcement from the Post Office that it will cut one-third of its cash machines over the next eighteen months spells bad news for cash-deprived communities. The move is expected to result in the closure of over 600 ATMs by March 2022.
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The announcement follows the discontinuation of the partnership between the Post Office and the Bank of Ireland, which operates the cash machines in the Post Office’s network. The resulting business review conducted by the Post Office has led to the decision to close around 600 ATMs while spending £16 million to upgrade other machines.
The Post Office clarified that the ATMs that were expected to close were rarely used, and the areas in which they are located have alternative means of accessing cash. Banking director at the Post Office, Martin Kearsley also added that 60 non-commercially viable ATMs would remain open to serve the communities’ needs. He also reiterated the Post Office’s plans to replace all their ATMs with new devices with the latest cash dispensing technology by 2023.
However, there are still concerns about how these plans could affect certain groups’ access to cash.
Research by the Bank of England indicates that digital payments have begun to be embraced and accepted more widely in the UK. Debit cards have been the most popular method of payment since 2017. However, cash offers certain advantages like convenience, and enabling tighter budget management, especially to the unbanked population.
The pandemic has been accelerating the pace towards a cashless economy, due to increasing restrictions by businesses on cash transactions. Link, the cash machine network, revealed a decline of as much as 80% in the use of ATMs, most notably in cities like London. Around 7,200 ATMs temporarily closed in the early stages of the pandemic.
The Access to Cash Review, which studies access to cash all over the UK, also revealed that 8 million people were at risk from losing access to cash. Many of these people come from the most deprived areas in the country.
"Our research demonstrates that the majority of people are uncomfortable at the pace at which we are moving towards a cashless society," said David Fagleman, from financial consultancy Enryo. "Not everyone is comfortable with making digital payments and we have to ensure that the rush to digitise does not leave people behind. Cash is still a very important payment method."
The government recently announced a series of measures aimed towards preserving access to cash, including testing cashback in shops without needing to make a purchase, as well as establishing bank branches in retail spaces or churches. Some of these have been put into motion as pilot programmes, to test whether they can continue to protect the needs of the vulnerable and unbanked segments of society who would otherwise suffer in a completely cashless economy.