Today (8 March 2021) in committee stage of the Financial Services Bill I will be putting forward an amendment suggesting the Secretary of State report to Parliament on the options for enabling cash back without a purchase.  This option is currently not permissible under EU regulations for payment services, Payment Services Directive (PSD).

The full text of the amendment:

Insert the following new Clause—

“Review on cashback without a purchase

(1) Within three months of the passing of this Act, the Secretary of State must report to Parliament on options for enabling cashback without a purchase, and a review of the Revised Payment Services Directive.

(2) The report under subsection (1) must include a review of the Financial Conduct Authority’s responsibilities under the Revised Payment Services Directive.”

Amendment 136C, Committee Stage Day 5, Financial Services Bill, House of Lords, 8 March 2021

The purpose of the amendment is to highlight issues around financial inclusion, access to cash and the potential to crowd in innovation to both.

Covid, as with so much, has illustrated more than two sides to the coin.  I chaired a parliamentary event in October 2020 about the future of digital payments and although (as might be expected) Covid has accelerated an existing trend towards digital payments there is a complex and nuanced picture of cash use. The decline in cash use is most pronounced in cities – for exampled ATM withdrawals down 90% in London but just 43% elsewhere. And whilst transactional cash use has fallen, the value of notes in circulation has risen, and was up 10% since March 2020. This is not just the UK, there is a similar pattern globally.

Last year, the Treasury said EU regulations made it difficult for retailers to offer cashback when people were not paying for goods or services, and this had been a barrier to a wider rollout. Well, that barrier is gone now. The economic secretary to the Treasury understands the issue:

“We know that cash is still really important for consumers and businesses – that’s why we promised to legislate to protect access for everyone who needs it. We want to harness the same creative thinking that has driven innovation in digital payments to maintain the UK’s cash system and make sure people can easily access cash in their local area.”

Similarly, Natalie Ceeney, the chair of the community access to cash pilots, said it was essential that the government and other groups committed to keeping cash viable.

“This is increasingly urgent,” she said. “Last year we warned that the UK was sleepwalking into a cashless society. Covid-19 has placed even greater strains on the whole system.”

My amendment (136C) would represent a shot in the arm for cash, for those who need it, use it, trust it, for financial inclusion and connected communities. Right now, we still need cash.  If not necessarily quite king, cash still very much has currency.  I hope the government will consider this amendment seriously for the benefit of all those who rely on cash.  If implemented the amendment has not only economic but social, psychological and community benefits.   

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