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Campaigners are sceptical about whether EU-wide rules offer enough of a lifeline for cash, and have called for better criteria to aid communities.
Access to cash in Europe has almost become as much of a hot topic in recent years as its equal and opposite reaction — the rise of digital payments.
Although the EU has confirmed new legislation regarding instant payments and the digital euro, regulators have also taken time to address the consequences to traditional methods of payment.
In its 2020 retail payments strategy, the European Commission indicated its commitment to cash, stating that “while promoting the emergence of digital payments to offer more options to consumers, the commission will continue to safeguard the legal tender of euro cash”.
The commission also said, at the time, that it may also decide to take appropriate action to protect the acceptance and availability of cash at the end of 2021.
Although the date has come and gone with no interventions from the commission, the importance of cash continues to be recognised. Fabio Panetta, the European Central Bank’s (ECB) digital euro chief, was rather bullish in a speech last summer when he declared that “cash is still king”.
Meanwhile, in member states, such as Sweden, which have become notoriously cash-lite societies, work has recently been carried out to ensure access to cash remains possible.
On January 1 last year, an amendment to the Swedish Act on Payment Services requiring banks to provide access to cash services entered into force.
But still, campaigners are concerned that the financially excluded and unbanked, which often includes those with disabilities, living in more rural areas or from older age groups, are at risk of being locked out from society by the digitisation of societies.
“We cannot force or exclude those who face really huge difficulties when there is no alternative to them paying with banknotes,” said Anne-Sophie Parent, advisor to AGE Platform Europe, while speaking at a webinar organised by Cash Essentials.
Parent raised the issue that many retailers stopped accepting cash during the pandemic due to concerns about spreading the virus.
“Even some public authorities accept only digital payments,” she said, noting that this means a significant subgroup risk being excluded from public services such as bathrooms and libraries.
In many countries, it has become considered that it is not necessary to legislate to impose a minimum amount of ATM and bank branches, she pointed out.
This is due to a belief that market forces will solve this issue themselves. This is already being done in the UK, for example.
In December 2021, major UK banks including NatWest, Barclays and HSBC agreed to join forces and share services to help people and businesses to continue to be able to access cash.
Banks involved in the initiative, which has been spearheaded by the Access to Cash Action Group, have to inform the ATM LINK network if they decide to close a branch.
Subsequently, LINK will independently assess what the closure means for cash provisions, looking at the community as a whole, including its residents and businesses, and whether a new solution, such as a post office banking hub, is needed.
Although not referring to the scheme directly, Parent said that similar initiatives would be welcome. “There are complaints in the media about banks' decisions to close branches or remove ATMs without a proper assessment of the impact this will have on daily life and the local economy.”
“For local shops, this may result in losing customers who will shop near the ATM in the nearby city, rather than their village,” she said.
Therefore, to improve consumers' experience across the EU, common indicators should be developed, she urged. “These could measure coverage in comparable ways across the EU.”
“This would be very helpful,” she said. “In some countries, the criteria used with geographical coverage is five kilometres from where you live, but in others, it's 15 minutes driving distance.”
The difference is too large, she complained. “Rural and urban areas are quite different, but at least there could be agreement on the criteria to be used, depending on the places.”
To monitor closely how access to cash is evolving in the future, the ECB could run regular surveys to consumers and businesses to assess satisfaction with cash services, she continued.
In particular, this could aid the EU’s European Accessibility Act. This directive aims to help marginalised groups, such as those who are disabled, through better access to services such as ATMs.
However, Parent warned that it must be implemented correctly by national regulators. `
Harmonisation key
Lack of harmonisation when it comes to accessibility in the different EU member states was a common topic for the panel. “If these requirements are being implemented in different ways across the member states, it is quite difficult for those actors who operate cross-border to buy a single ATM type to deploy in all different countries,” warned Diederik Bruggink, payments chief at WSBI-ESBG, an influential banking association in Brussels.
The criteria varies across member states and the appropriateness of this must be addressed in the future, he said, agreeing with Parent that distance and capacity have become an important topic.
In spite of this, some member states are taking matters into their own hands. This can include national action plans to aid cash use, which can be undertaken in a legally or non-legally binding manner.
One country that is doing just this is the Netherlands. Roel Van Holt, a Dutch central banker, noted a covenant that has been developed between the central bank and financial institutions.
Should financial institutions opt not to sign the agreement, then the Dutch Ministry of Finance is likely to take action on this and prepare legislation that guarantees access to cash, he continued.
