Shops could soon offer cashback without purchases as ministers plan to rip up EU rules
- In just three years 10,000 free ATMs are thought to have been removed
- Consumers received £3.8billion in cashback last year when paying for items
- EU law requires shops to be registered or authorised to provide cashback to customers who do not make a purchase
Shops could effectively become free cash machines as bank branch closures make it harder to withdraw money.
Ministers want to rip up EU rules that make it hard for shops to offer cashback to customers who don’t buy something.
The closure of many banks and free ATMs means those who live in rural communities must often travel miles to take cash out.
The switch to online banking has accelerated the decline of cash, and coronavirus left some retailers refusing to accept ‘contaminated’ notes that could spread Covid.
In just three years, more than 10,000 free ATMs are thought to have been removed or changed so that fees of up to £2 are charged for withdrawals.
Campaigners have warned that Britain is ‘sleepwalking’ into becoming a cashless society – despite the fact that many consumers and firms rely on coins and notes.
They say the elderly, disabled and those in rural areas are among the hardest hit.
Consumers received £3.8billion in cashback last year when paying for items
But today the Treasury will lay out plans to ‘protect the UK’s cash system and ensure people have easy access to cash’.
Consumers received £3.8billion in cashback last year when paying for items, making it the second most popular way of withdrawing cash behind ATMs.
EU law requires shops to be registered or authorised to provide cashback to customers who do not make a purchase, or they must act as an ‘agent’ of a card company by paying a fee for each cashback payment they make – meaning they lose money if the customer does not buy anything.
The Treasury and the banking industry is looking at ways to fund cashback so retailers are compensated or do not incur a fee.
One ploy to get around EU rules is for shops to offer postcards for 1p so customers must only make a nominal purchase to get cash.
As part of the Community Access to Cash pilot scheme, trials are taking place in nine rural communities.
They include Hay-on-Wye in Wales, which has no bank, and Ampthill in Bedfordshire, which has one ATM to serve a population of more than 8,000.
Financial expert James Daley said: ‘One of the reasons to get excited about Brexit is we can repeal some of the EU’s silly rules.’
Natalie Ceeney, chairman of Community Access to Cash, said: ‘This is increasingly urgent. Last year we warned that the UK was sleepwalking into a cashless society.’
Gareth Shaw, of the consumer group Which?, said: ‘The Government made a commitment to protect access to cash in the last Budget, so it’s positive it is now taking steps towards legislation.’