The letter in response to the Treasury proposals confirms many retailers have to pay 3-4% for all transactions through their merchant, making the costs of cashback unsustainable.
The team also suggest the Post Office's banking and cash services should be brought under the Financial Conduct Authority's (FCA) regulatory remit.
At the same time, they agree the FCA should be appointed as regulator overseeing cash distribution but point out the Authority would need extra resources to take on the extra work.
The potential for cashback to play a bigger part in the UK's cash distribution network was a key element of the Treasury's proposals to main cash access as the country moves towards a cashless society.
The Access to Cash Review team have responded to those proposals (published in October) by pointing out some of the barriers. They say:
Taken together, these could be insurmountable hurdles unless they are tackled in the final proposals put forward by the Treasury.
The Review team suggest:
The idea of cashback without purchase is an attractive one but, as the Access to Cash team have demonstrated, it needs to be carefully thought through.
The Access to Cash Review team agree with the Government that cash provision will need to move towards more of a utility model, and it should incorporate various channels including cashback and the services of the Post Office.
However, they highlight some key concerns here too:
We've also seen numerous ATMs disappear from towns and cities thanks to bank branches closing, and even the Post Office is set to close 600 ATMs over the next 18 months.
So, overall, the Access to Cash team want greater certainty for the sector including legal obligations for banks, along with the Post Office being brought under the FCA's remit.
There are some other important points raised in the team's response, namely their observations on cash usage and the role of the FCA is maintaining access to cash.
For instance, they suggest many people making decisions in boardrooms have little understanding of why some customers still need to use cash. They instead see cash handling as a quantifiable business cost which can be cut.
Finally, the Access to Cash team agree with the Government that the FCA should regulate cash distribution and deposits, highlighting their existing focus on consumer vulnerability and ability to innovate.
However, they caution that the FCA already has a large remit and limited resources. To work effectively as cash regulator, the team say, they must be provided with adequate resources.
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