Banks to be fined if they fail to provide free access to cash under new laws

badmemory

Unless these fines are larger than the costs they are saving then I think it unlikely to make the slightest difference.  They will just pay up & say that is so many b/million we have saved.

mikeyhinde

Is cash really the more expensive option?  Plenty of retailers around here that shift predominantly low cost items are cash only given that it avoids having to pay the fee they'd get hit with on every card transaction, leaving them just a single fee to bank cash in one transaction.

One would presume that all the neo-banks are unaffected by this, so for those that decry the intervention to protect cash it'd be an option to move to a Monzo, Starling etc and they should be able to provide better value given their lack of branches and ATMs.

jbrassy

mikeyhinde said:

Is cash really the more expensive option?  Plenty of retailers around here that shift predominantly low cost items are cash only given that it avoids having to pay the fee they'd get hit with on every card transaction, leaving them just a single fee to bank cash in one transaction.

One would presume that all the neo-banks are unaffected by this, so for those that decry the intervention to protect cash it'd be an option to move to a Monzo, Starling etc and they should be able to provide better value given their lack of branches and ATMs.

Cash is a more expensive option for retailers. Firstly, there's the cost of having to go to the bank to deposit cash which the bank charges a fee for. Second, insurance costs are higher for businesses which handle cash. If a robber walks into a shop which doesn't accept cash and asks them to empty the till, there will be nothing there. It's true that retailers are charged a fee everytime they accept a card payment, but they can internalise (factor in) this cost within the price of the goods they sell. 

You are right though that switching to Monzo, Starling etc is probably the best thing to do as customers of these banks don't have to cross-subsidise branch networks that the majority of people use once in a blue moon. If people want to use a bank with loads of branches, they should accept there's a cost associated with this and they are going to have to pay for it.

Zanderman

jbrassy said:

mikeyhinde said:

Is cash really the more expensive option?  Plenty of retailers around here that shift predominantly low cost items are cash only given that it avoids having to pay the fee they'd get hit with on every card transaction, leaving them just a single fee to bank cash in one transaction.

One would presume that all the neo-banks are unaffected by this, so for those that decry the intervention to protect cash it'd be an option to move to a Monzo, Starling etc and they should be able to provide better value given their lack of branches and ATMs.

Cash is a more expensive option for retailers. Firstly, there's the cost of having to go to the bank to deposit cash which the bank charges a fee for. Second, insurance costs are higher for businesses which handle cash. If a robber walks into a shop which doesn't accept cash and asks them to empty the till, there will be nothing there. It's true that retailers are charged a fee everytime they accept a card payment, but they can internalise (factor in) this cost within the price of the goods they sell. 

You are right though that switching to Monzo, Starling etc is probably the best thing to do as customers of these banks don't have to cross-subsidise branch networks that the majority of people use once in a blue moon. If people want to use a bank with loads of branches, they should accept there's a cost associated with this and they are going to have to pay for it.

Bit in bold sounds like a politician's answer - yes it costs more but you can, if you like, charge more! You could, of course do the same to factor in cash costs (and presumably retailers do exactly that) so it's a non-argument.

On the wider point about whether cash is cheaper or not for retailers I'd need to see some real figures for cash costs from a cross-section of actual retailers rather than generalisations before knowing what is more or less expensive - cards or cash.

For very small retailers, micro (but local) businesses, car-booters etc - I doubt cash is more expensive. Likewise for facebook or gumtree sellers.  Or for small charities charging for entry to events etc.  Or simply collecting donations.  Convenience, of course, starts to become a factor for the latter as they may put off those who don't carry cash, so the canny ones have started getting card readers - but they still take cash too so they don't put off cash users (or people who might distrust a card reader that works via someone's personal phone).  

On the broader theme of cash v not cash use I don't think generalisations work in any of these arguments - the point, surely, is that there are many out there who still use cash - either sometimes or all of the time. And yes, there are more who don't use cash, either never or rarely. But just because more don't doesn't mean everyone shouldn't. Conformity is a long way off.  There are, according to a stat I saw yesterday, over 1 million in the UK who don't even have a bank account. Cash will still be king to them. They're the reason supermarkets have signs on some tills warning that this one is Card Only!

Shakin_Steve

I think that I am fairly typical in that I mostly pay by card but always have some cash in my wallet. Getting rid of cash altogether is as much a battle for hearts and minds as it is for convenience for banks and retailers. People my age (70) are attached to cash and, probably, a little bit afraid of not having that feeling of comfort that it provides. I'm not ashamed to admit that, no matter how much I'm told it's illogical.
It's the way things have always been, for me, and I don't want to lose that option.

badmemory

There is also the problem of what someone does when the bank just closes their bank account.  It doesn't matter whether you have done something they think deserves it or are completely innocent.  You still can't pay the bills etc unless you can use cash.

friolento

Shakin_Steve said:

I think that I am fairly typical in that I mostly pay by card but always have some cash in my wallet. Getting rid of cash altogether is as much a battle for hearts and minds as it is for convenience for banks and retailers. People my age (70) are attached to cash and, probably, a little bit afraid of not having that feeling of comfort that it provides. I'm not ashamed to admit that, no matter how much I'm told it's illogical.
It's the way things have always been, for me, and I don't want to lose that option.

Same age as you, it is years since I have last used cash, I am not attached to cash, and not comforted by cash in my pocket. Don’t be ashamed if you are, do what is right for you.

retiredbanker1

My take on this is that it will be a useless piece of legislation and no institution will be fined.
End of.

One-Eye

The new act doesn't come into force until Summer 2024. Banks and Building Societies thus have a year to get their branch network in order. Expect a rush of closures over the coming months.

Eco_Miser

Shakin_Steve said:

I think that I am fairly typical in that I mostly pay by card but always have some cash in my wallet. Getting rid of cash altogether is as much a battle for hearts and minds as it is for convenience for banks and retailers. People my age (70) are attached to cash and, probably, a little bit afraid of not having that feeling of comfort that it provides. I'm not ashamed to admit that, no matter how much I'm told it's illogical.
It's the way things have always been, for me, and I don't want to lose that option.

I'm even older, but not attached to cash, except that several organisations  I use (CICs and unincorporated member associations) are not set up for cards. Cash come in, cash goes out, no fees involved, not even when paying into a bank.