Cashback can’t solve the cash crisis

New ways to access cash are needed

For several years Which? has campaigned to protect consumers’ access to cash. While the proportion of payments made using debit and credit cards has increased dramatically in the past two years as a result of the pandemic, many consumers still rely on cash. For some, this is habit or preference, for others, cash is a vital way of keeping control of their spending. The declining popularity of cash should not leave those who rely on it without their preferred way to pay, yet the number of ATMs in service dropped by almost 8,000 in the 18 months to September 2021, and 801 bank branches closed between March 2020 and July 2021. The reduction in access to cash is causing tangible harm to consumers, with a Which? survey in July 2021 finding that more than half of consumers (57%) had experienced at least one issue accessing cash or a bank branch in the last year. 

This has led the government, who have committed to protect access to cash, to explore other ways to help people get their hands on cash in their communities. One such initiative, introduced in 2021, was the ability to request ‘cashback without purchase’. Under this scheme, people can request cashback from their local shop without needing to buy anything or pay a fee. LINK have announced that this is being rolled out to 2,000 shops with Paypoint terminals to support access to cash. 

The intentions of this intervention are positive - but will it work in practice? In new research, we explored how consumers feel about ‘cashback without purchase’ to assess how effective this is likely to be in ensuring consumers have access to the cash they need.

Awareness and use of cashback without purchase is low

Only one in six people (16%) were aware of the cashback without purchase scheme, four months after its launch, according to a survey of 2,046 people carried out for Which? by Yonder between 9th and 11th November 2021, with data weighted to be nationally representative. And amongst this minority who were aware, only one in three (31%) people claimed to have made use of the scheme. This suggests that just 5% of the UK population have made use of cashback without purchase to date. 

We might expect any new service to take time to catch on. But as we dug into people’s attitudes around cashback without purchase, we found worrying indications that the scheme simply will not appeal to a significant number of people. Nearly half (46%) said they were unlikely to use the service. Half of this group (49%) said this was because they rarely or never take cash out - arguably the service is not aimed at them. But for the remaining 51% who do use cash, there were a variety of reasons why the service did not appeal. 

The shortcomings of getting cash in shops

Our research shows that some people just aren’t that comfortable with the idea of getting cash out in a shop. Privacy and security were common concerns, with 17% of those who said they were unlikely to use the service reporting that they would be concerned about the lack of privacy when withdrawing cash in this way. One in six (16%) of those who thought they wouldn’t use the scheme reported that they would be worried about security issues taking cash out in this way. 

People were also concerned about inconveniencing local stores, with a quarter (25%) of those unlikely to use this service saying it would feel unfair to the shop or business to handle the cashback service. The same proportion (25%) said it would not be a convenient way to access cash.

Cashback without purchase is a worthy innovation, but more is needed to protect access to cash

Cashback without purchase is a valuable tool in helping to protect access to cash, and should help to maintain a lifeline to cash for those who live in areas where low footfall means an ATM has closed. It also allows people to withdraw exact amounts rather than be limited to notes which could help people who may be struggling financially. But our survey findings demonstrate that cashback cannot meet all people’s needs for cash and it should be viewed as part of a range of solutions that are required to protect access to cash for those who need it most.

Banks need to do more to protect access to cash - and recent announcements including plans to share services to help people and businesses maintain access to cash are encouraging. But relying on voluntary measures is not sufficient to protect consumers’ access to cash. Legislation - promised nearly two years ago by the government - is urgently needed to underpin these measures, and ensure that consumers will continue to be able to access cash for as long as it is needed, in ways that work for them.