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UK Government outlines plans for retail cashback without a purchase

Brits will be able to get cashback from shops without needing to buy anything, under new proposals from the UK Government to protect the nation's cash system.

  9 4 comments

UK Government outlines plans for retail cashback without a purchase

Editorial

This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community.

The decision follows years of campaigning from consumer advocates over the disappearance of cash from the UK's high streets as banks abandon branches and rip out ATMs. The global pandemic has further accelerated the decline of cash, forcing the Government's hand to introduce new rules to ensure that cash remains available for those who prefer it to digital alternatives.

John Glen, economic eecretary to the Treasury, says: "We know that cash is still really important for consumers and businesses - that’s why we promised to legislate to protect access for everyone who needs it.

"We want to harness the same creative thinking that has driven innovation in digital payments to maintain the UK’s cash system and make sure people can easily access cash in their local area."

The Government says Britain's imminent exit from the EU will enable it to skirt PSD2 rules that currently label cashback without a purchase as a regulated payment service.

Alongside legislating for retail cash back, the Government is also proposing to provide the Financial Conduct Authority with overall responsibility for maintaining a "well-functioning" retail cash system.

At present, The Bank of England, Financial Conduct Authority, Payment Systems Regulator, and HM Treasury each have specific roles and responsibilities for oversight of the cash system.

Says the UK Treasury: "Close coordination between these authorities has been highly effective, particularly in managing risks to cash through Covid-19, but there may be significant benefits to giving a single authority overall responsibility for setting requirements to meet the cash needs of consumers and SMEs."

The Government has entered a six-week call for evidence from consumer organisations, businesses, financial institutions, and providers of ATM and payment services in order to seek views on "how to ensure industry continues to offer ways to withdraw and deposit cash, how to improve cashback, what affects cash acceptance, and where regulatory responsibility should sit".

The proposals have already come in for criticism from financial accountancy firm Old Mill. Phil Mills, Old Mill head of food and drink says the proposals could hit already struggling businesses hard due to the cost of handling cashback for free, and – for many who have already gone cashless, encouraged by the Government during Covid-19 – the cost of bringing cashback onto the premises.

"Businesses face costs in handling cash and bank charges, which are factored into the price consumers pay for goods," he continues. "Even if the cashback transaction itself was made free to businesses somehow, without a purchase, there is nothing in this for the business, who is also having to pay the wages of the person processing the transaction."

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Comments: (4)

A Finextra member 

While continued availability of cash is welcomed and necessary, it seems wrong to me that retailers are the ones having to step into the vacuum left by banks in their failure to provide the service the country needs. I just hope the role of the merchants are recognised and that they're well compensated.  

A Finextra member 

I read this with mixed views - I can understand the need to open up the access for cash with the reduction and closures of ATMs, however, the question will be what next? Will all cashpoints be deemed unnecessary with people being able to get cash from shops and then that raises a new issues with the increase in contactless payments will the shops have enough cash in the first place!? So it seem inevitable to me that this move will drive the support towards a cashless society… (in time at least!)

 

Roberto Garavaglia

Roberto Garavaglia Independent Advisor at Innovative Payments & blockchain Strategic Advisor

Please, look up at such a statement: "The Government says Britain's imminent exit from the EU will enable it to skirt PSD2 rules that currently label cashback without a purchase as a regulated payment service".

I wonder if  the  use of the verb "to skirt" is just fitting ...

Ketharaman Swaminathan

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

For readers in India and other countries where "Cashback" refers to a post-purchase discount that's paid directly into their payment instrument (say credit card), cashback in UK means something else: Consumers reach the checkout, pay with credit card or debit card for their purchase plus a relatively small amount like GBP 25 and get GBP 25 in cash from the attendant. This helps them avoid a separate trip to an ATM to withdraw small amounts of cash.

The way I understand the proposed new rule, customers can walk into a store and swipe / dip / tap their credit card or debit card and walk out with, say, GBP 25 without making any purchase in the store.

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