New data released last week reveals that the disappearance of cash machines is continuing at a rapid pace. A total of 1,400 closed in the six months between January and August 2018, and Positive Money has found that some parts of the country lost over a quarter of their machines in just a few months.
While certain private interests stand to gain from cash’s demise, it’s bad news for the rest of us. Central bankers have warned that the move to create cashless societies poses a big risk to financial stability. The more dependent we become on big banks and card companies to pay for the things we need, the greater the risk to the wider economy when those institutions and their systems fail.
If consumers are unable to get hold of cash, it’ll leave card companies free to hike charges on payments. Control of the digital payments market is highly concentrated, with Visa accounting for 97% of all debit cards in 2017. With a captive market, card companies would be free to hike the ‘interchange fee’ on card transactions, resulting in higher prices for consumers.
Most cash machines in the UK are currently free-to-use. They’re primarily funded via fees paid by banks, and some banks are now complaining that the cost of providing this access is too high. Yet banking is among the most heavily-subsidised sectors of the economy. The ability to withdraw cash is the least the public can expect in exchange for the billions in implicit taxpayer support that big banks receive annually.
Banks and card companies stand to benefit from a world in which consumer choice is restricted, and we all have to rely on debit and credit cards to manage our money. The real reason why cash machines are under threat is not that consumers are withdrawing less cash. In fact, the amount of cash in circulation is at record levels, and 77% of people regarding access to a free-to-use cash machine as essential to their lives. What’s really going on is that banks and card companies are deliberately seeking to undermine the network.
The Payment Systems Regulator has the power to help stop these closures, by stopping the cuts in the fees banks pay towards cash machines. We recently launched a petition calling on them to stop the war on cash, which has already been signed by 2,637 people. The regulator has since announced plans to protect part of the network, but we need them to go further and stop these cuts altogether.