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Retail cashback plan to maintain availability for cash transactions
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Retail cashback set for post-Brexit boost


The government wants to encourage retailers to provide cashback services to those who do not buy goods, but the proposal raises some interesting questions for shopkeepers and their advisers.

20th Nov 2020
Freelance Journalist
In association with
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The government set out its cashback plan in a call for evidence last month that aims to ensure those who are less able to use digital payment methods can still rely on cash.

Until now, EU regulations made it difficult for retailers to offer cashback when people were not paying for goods or services, but once this barrier is out of the way on 31 January, the government is keen to free up retailers to offer cash.

Contactless preferred during crisis

Brexit aside, the plan is running up against the effects of Covid-19. Cash trading has been a major causalty during the coronavirus crisis, with many businesses opting for contactless card payments rather than have staff handle notes and coins. To support this hygiene measure, the contactless card payment limit was increased to £45.

Economic Secretary to the Treasury John Glen commented that the dive in hard cash circulation “serves to heighten the risks to those that continue to rely on cash”. However the government would ensure “those people and businesses don’t get left behind”, he added.

Retail cashback was the second only to using ATMs to withdraw cash in the UK during 2019, helping to recirculate £3.8bn of cash in local areas.

Security issues

Swoop co-founder and chief operating officer Ciaran Burke backed the government’s proposal as a way to keep notes circulating as bank branch networks contract as a result of the economic downturn.

“Where retailers used to be able to pop down to local branches to deposit cash, this new scheme offers an incentivised solution to keep cash reserves lower from a security perspective and to reduce the number of trips that need to be made to far away branches to make deposits,” said Burke.

Burke’s colleague, Simon Bolan, the advisory development manager at Swoop, added: “Whilst Covid-19 has driven the need for more contactless payments, there are still many people and retailers in the UK who rely heavily on cash to function, especially those who do not have access to digital cash solutions and some of the more vulnerable members of society.

“Napoleon once said that ‘the UK was a nation of shopkeepers’, so empowering those retailers to help their customers access cash appears, on the face of it, to be a very good thing.”

Practical concerns

But there are some practical issues to consider if the scheme goes ahead as planned. The amounts of card transactions processed each month can be used as a basis for merchant cash advances, but retailers will need to hold higher levels of cash to meet any peaks in demand and account for these ‘non-sale transactions’ correctly.

“This is something accountants will need to be conscious of when offering support and guidance to clients in this sector,” said Bolan.

While broadly supportive of the scheme, Peter McNamara, chief executive of ATM operator NoteMachine called on the government safeguard ATMs as the main source of cash.

“The safest and most economical way to provide access to cash is through ATMs. It’s not always viable or safe for small business to keep large reserves of cash in store and so businesses shouldn’t be forced to fund this service. The government must ensure ATMs remain genuinely accessible,” McNamara said.

Contact Swoop directly  to find out more about the online finance options available to your retail clients.

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