Shopkeepers will be paid to offer customers cashback in areas where cash machines are disappearing, Money Mail can reveal today.
It is hoped the move will boost footfall in rural communities, where the closure of basic bank services has left High Street businesses on the brink.
Visa’s scheme marks the first time all the UK’s banks will pay small stores to offer cashback – a service already provided by many large supermarkets – and follows a successful trial with Lloyds last year.
Win-win: Greengrocer Beccy Soper backs Visa’s scheme which will see UK’s banks paying small stores to offer cashback
It will target more than 400 postcodes in remote and rural parts of the UK, which have been identified as ‘cash deserts’. As an incentive to sign up, shops will get 20p each time they provide cashback.
Money Mail has long campaigned to protect access to cash amid the closure of thousands of bank branches in towns and villages.
Jeni Mundy, managing director at Visa UK & Ireland, says the company recognises the vital role cash still plays, despite the growth of digital payments.
She adds: ‘This is why we want to increase the options people have to gain access to cash, helping to extend financial inclusion by enabling them to choose how they pay, be that by cash, cards, mobile devices or other means.’
Initially, customers will have to make a purchase using their debit card in order to get cashback.
But Visa is hoping to roll out a separate scheme where shoppers don’t have to buy anything by the end of 2020.
Lloyds says 170 outlets participated in the pilot scheme in 2019, resulting in around 6,000 cashback transactions per month.
Most businesses involved are small retail shops such as greengrocers and pharmacies, but also include a number of pubs and restaurants.
The scheme is already up and running, so businesses can sign up straight away by contacting their bank.
Vim Maru, group director for retail banking at Lloyds, says the trial has already ‘improved the availability of cash in local communities, particularly in areas under-served by free-to-use cashpoints and where access to cash may be restricted’.
He adds: ‘We’re delighted that Visa is encouraging all of its bank partners to get behind the scheme to create a cashback system that both rewards retailers and protects access to cash.’
However, critics have accused banks of helping to create so-called ‘cash machine deserts’ where it is impossible to withdraw cash. More than 3,300 branches have closed across the UK since January 2015.
Visa’s scheme marks the first time all the UK’s banks will pay small stores to offer cashback – a service already provided by many large supermarkets – and follows a successful trial with Lloyds last year
Also, Lloyds successfully lobbied for a cut in the fees banks pay when account holders access money from an independent operator’s cash machine.
This has made it harder for these firms to turn a profit and has been blamed for the removal of huge numbers of ATMs.
Shopkeepers in target areas have backed the initiative, but some voiced concerns over cash flow and security.
Beccy Soper, of Beccy’s Greengrocers in Stockbridge, Hampshire, has been participating in the pilot scheme for around a year.
She says: ‘It’s a win-win. It saves me having to find the time to pay the cash in at the bank, and it saves customers a trip to the cash machine.
‘My elderly customers prefer asking me for cashback than using the technology of an ATM.’
Ed Piercey-Jones, 54, who runs the Old Forge Tea Room in Hambledon, Hampshire, says although the scheme is ‘a good idea in principle’, he’s reticent about signing up.
‘I’m worried about having to keep extra cash in the till,’ he adds. ‘We do get break-ins around here.’
Hambledon is under consideration for a new cash machine under a separate community request scheme run by ATM network Link.
Resident Amey Milsom, 34, would welcome anything that improves access to cash.
She says: ‘I’ve not been able to get cash ever since I got into gardening last year.
‘I like to buy plants neighbours have grown in their gardens, but that requires loose change. However, the nearest ATM is three miles away.’
The village of Southwick, seven miles south of Hambledon, faces a similar dilemma.
Mandy Hayward, 56, who manages the golf club bar, says members often ask her for cashback.
‘We don’t offer it because we’re a small business and sometimes our takings are only £50 a day.’
She adds: ‘To stock more cash, we would have to get it from the bank, which charges a fee. I’m not sure how much the 20p incentive would change things.’
Shopkeepers can find out if they are eligible for the Visa scheme by looking up the list of areas included under Link’s financial inclusion programme.
Another scheme launching in April pays retailers 12p when customers get cashback with a Mastercard debit card.
Link chief executive John Howells says: ‘Link welcomes cashback, alongside free ATMs and Post Offices, as good, safe ways to help consumers get cash, and a source of useful fees and footfall for retailers.’
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