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It's getting harder than ever to access your own cash

by Ruth Mendel, CAS Financial Health team.

This article was first published in the Herald on 10 February 2021.

More than 10,000 free-to-use cash machines have disappeared across the UK in the last two years, with 1 in 4 Scottish ATMs now charging you to withdraw your own money.

The pandemic has certainly forced us all to take our eye off the more mundane aspects of life, but we shouldn’t let it blind us completely. While we’ve been distracted, it’s been getting harder than ever to freely access our cash.

Does it matter? After all, we can all bank online or by phone now. What with contactless payments and the good old chip and pin, many of us probably can’t remember the last time a £10 note passed through our hands, right?

Well, that certainly isn’t the case for everyone. While a cash-less economy may appeal to some, there are many people who may not adapt so quickly, either because they don’t want to or because they are unable to.

It is estimated that around 20% of people in Scotland struggle to use digital technology. Of those who come to the Citizens Advice Bureau the figure is over a third. Poor broadband connection, internet fees, lack of skills, disability, no devices - whatever the cause, digital exclusion is a reality for thousands of our friends and  neighbours.

And it’s not hard to think of people who will be hit by the inability to easily get their hands on their money when they need it. Older people, those who live in remote communities, those without their own transport. And those - so many people now - who are living on pitifully low incomes and struggling every day just to get by.

If you’re living on a tight budget, taking out the cash you have for the week is a way to help make sure you don’t risk spending more than you have and getting into debt. Also, online and card payments can often have hidden charges that cash transactions don’t. And small charges can matter enormously when you don’t have much.

So to us in the CAB network, the picture here is infuriatingly familiar. The people who are least able to cope are getting it in the neck yet again.

The wave of bank closures in recent times is also seeing the removal of the last bank in some of Scotland’s most deprived communities. In October, Which? reported that nearly half of the 1,000 bank branches that were open in Scotland five years ago will have shut by the end of this year.

The banks say that ‘changing customer behaviour’ is driving the closures: with more people banking online, what’s the need for physical branches? That’s a fair point but there’s a line about chickens and eggs that comes to mind. Many of us find ourselves reluctantly using online and telephone banking because we no longer have a convenient local branch.

Bank closures are one thing. But the other part of the problem is the removal of those free ATMs. What’s the story there?

It’s all about something called the interchange fee. This is the charge that is paid by banks to ATM providers for every cash withdrawal. A recent decision to cut this fee has meant that these costs have been passed onto consumers, with the result that many ATMs that were free will now charge you.

So, local banks are closing at a rate never seen before, and free-to-use ATMs are evaporating. Soon the pay-to-use ATM will be the only option for getting your hands on your own hard-earned cash.

But for those struggling to get by on Universal Credit or a low wage, a £2 transaction charge by an ATM can really cut into your income. And if you had to get a bus to the next town to use that ATM because your local bank has closed, you can add the cost of the fare there and back. You can see how, for many, these changes can be more than just an inconvenience.

So what’s to be done?

Well, on the closure of free ATMs the resistance is already underway. A cross-party group of MPs has written to the Payment System Regulator urging them to introduce a tiered or zonal approach to interchange fees, which would make sure that funding is fairly distributed throughout the UK to protect access to cash in all communities.

Meanwhile, the Financial Conduct Authority is asking banks to re-consider branch closures, at least during lockdown. They point out that it is currently harder for banks to reach all their customers to inform them of a closure, and that some customers might need access to in-branch services to prepare for it.

We at CAS would suggest the solution needs to be a longer term one. Surely it can’t be impossible for banks, ATM providers and regulators to co-ordinate to ensure that all communities retain some sort of free access to cash for those who need it.

Our aim here is to hold up a flag, and to ask that those who are making these decisions make some allowances for those who are being left behind. Because no, a society that is completely without fair access to cash is not a good objective. Not while there are people who can’t function in such a reality.

If ‘build back better’ is to be more than just a slogan; if we really mean it when we say that the post-Covid Scotland needs to be a fairer place, this is just one of the areas where a little imagination could prevent serious problems for many vulnerable people. Let’s ensure that those who still wish or need to have reasonable access to their cash can have it.