UK Cash Access & Payment Choice. Quite Simply - Legislation is Required.

Posted on: 05/12/2021

Two points were very illuminating to read in the latest HM Treasury consultation on access to cash.

Firstly, it was noted that the government was looking for a simple solution.

Secondly, it was made clear that the government was not minded to make it compulsory for businesses to accept cash in payment for goods and services.

Unfortunately, those two statements effectively eliminate the potential for anything of lasting good to come out of the consultation.

In relation to a "simple" solution. there isn't one as far as cash withdrawal and deposit access are concerned.

Many years of bank branch and ATM closures have left cash access in a precarious position. Radical steps are required to address the situation.

The UK's cash distribution system must be entirely removed from the control of organisations with a vested interest in the demise of cash.

A utility is required - established through legislation - to take full responsibility for cash distribution through existing channels. The utility will control cash centres and the ATM network, including the ATMs themselves. Any profits made by the utility will be reinvested in improving the service to the UK public. The utility will be charged with achieving very clearly defined coverage targets, for both cash withdrawal and deposit.  Deposit facilities will include local recycling of deposited cash, both banknotes and coins.

However, the utility is only part of the answer. Cash must also be made to circulate more efficiently betwen the public and businesses at a community level. There is enough cash in circulation in most communities to satisfy the needs of local residents, if it can flow smoothly from the public to businesses and back again.

The rehashed "cash back" , soon to be made available at only 2000 locations, is not the comprehensive answer required.

An innovative means to achieve smoother local cash circulation is to make UK National Lottery Terminals a channel for cash withdrawal and deposit. 

There are 45,000 National Lottery Terminals in the UK - and they are all being replaced in 2024, when a new ten year licence for the operation of the lottery will commence.

95% of the UK public live within one mile of a National Lottery Terminal, a % which can be increased under the terms of the new licence.

The UK government has it within its power to make financial services a specified product category to be offered by the National Lottery operator. This would compel the businesses providing locations for the 45,000 terminals to offer specified financial services, which would include the withdrawal and deposit of cash.

All the businesses which house National Lottery Terminals have cash flowing into their tills, including for the purchase of lottery entries. It makes sense to put that cash back into the hands of the public, rather than transporting it back to the few remaining bank branches or distant cash centres.

The whole system can be managed through a smartphone app, augmented by alternative paper bar code distribution to members of the public who do not have or wish to use digital solutions. 

The app will be clever enough to only direct the public to those locations within the National Lottery Terminal estate which have cash at the time it is requested.

The cost of delivering cash to the public in this way will be tiny compared to the level of revenue of the National Lottery, which exceeded £8 Billion in 2020.

The cash utility mentioned above must be designed to dovetail with the National Lottery Terminal cash access channel by, for example, offering affordable delivery of cash to businesses with terminals that wish to supplement their cash balances to deal with unusual peaks in demand. 

Allowing community residents to deposit small amounts of spare cash - up to £500 would be sensible - via the National Lottery Terminals would further enhance the efficient local circulation of cash.

There you have it. Innovative and long-term solutions that can ensure the UK public can use cash conveniently for the forseeable future. For example, the new lottery licence lasts for 10 years.

The other step the government need to take is to introduce in 2022 a Payment Choice Act which compels businesses to accept cash for in-person payments. This is common in other countries. Why would the UK public deserve less?


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