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New legislation to allow cashback without purchase

John Fitzsimons
Written By:
John Fitzsimons
Posted:
Updated:
21/04/2021

The government has backed an amendment to its Financial Services Bill which will allow people to request cashback from retailers without having to make a purchase.

The amendment was introduced by Lord Holmes. Offering cashback in this way was previously not permissible under the Payment Services Directive, the EU regulations which cover payment services.

The hope is that retailers offering this facility will act as an alternative to a traditional cash machine in areas where bank branches and ATMs have been closed.

We need cash machine alternatives

The move was welcomed by Link, the cash machine network, which highlighted that last year it began a trial with PayPoint which allowed shoppers to withdraw cash using the Link network from retailer tills without having to pay a fee or make a purchase. The trial is ongoing across 12 shops in four communities across the UK. Since the trial was launched, more than 12,000 cash withdrawals and 2,000 balance enquiries have been made, wth the typical withdrawal around £29.

John Howells, chief executive officer of Link, said the legislation was a positive step and brought “much needed innovation” to access to cash.

He continued: “Link expects that free ATMs will continue to be the most popular method for withdrawing cash and will be a feature of high streets and supermarkets for years to come. However, as consumers continue to increase their use of digital or card payments, we need alternatives where ATMs may not be viable.” 

A boost for rural areas

 

David Postings, chief executive of banking trade body UK Finance, said that cashback without purchase will mean people are able to get cash at a time and place that is convenient for them, and is particularly welcome for those in rural communities.

He continued: “This new legislation will complement the industry’s existing work to maintain access to cash, including the recently launched community access to cash pilots.”

Access to cash

Offering people the ability to access their cash is a hot topic at the moment, on account of the scale of ATM closures in recent years.

Recent research by Which? found that up to 27% of free cash machines disappeared from the UK’s streets over the last three years, while some areas ‒ particularly more deprived towns ‒ have seen a jump in paid-ATMs.

While cash machine use dropped last year, significant numbers of us still remain reliant on cash and need access to free cash machines.