Financial Inclusion: The £3.63 problem and free access to cash

In this blog we take a look at the publication of the LINK Consumer Council’s Annual Report for 2021 which provides some interesting insights into financial inclusion in the UK.

The report summarises the work done in 2021 by the LINK Scheme Ltd Consumer Council who advise LINK on all their financial inclusion work, and has spearheaded the introduction of cash at the till as well. 

You can read the full report here: but this newsletter provides a quick summary of the seven aspects of LINK’s financial inclusion activity.

1: Financial Inclusion in numbers

LINK have been actively involved in protecting theUK’s ATM footprint and improving free cash access for communities across the country:

Source: LINK

2: Access to cash remains an important part of the UK’s payment mix

Although LINK does not expect cash use to return to the levels seen before the pandemic around five million people in the UK still rely on cash:

Despite a drop in cash usage, around five million people still rely on cash. For this reason, it is more important than ever that the industry comes together to support better cash access

Tracey Graham, LINK Consumer Council

3: Consumers are choosing new ways to pay

Withdrawals from LINK cash machines are down more than 40% compared to before COVID-19, as people have chosen new ways to pay:

Source: LINK


4: Addressing the £3.63 problem

Mike Chambers using Cashback Without Purchase at The Offie in Tiptree, Essex

For many cash-users, withdrawing a round figure of £10 or £20 is second nature, but there are many others who need a much smaller and sometimes specific amount and are unable to access it – what has become known as “the £3.63 problem”.

Following a successful 12-month pilot, LINK, the UK’s largest cash machine network, is rolling out “Cashback Without Purchase” across the UK. It is already live in over 1,000 locations.

This initiative means consumers will be able to withdraw cash or check balances in smaller shops without the need to buy an item in-store or pay a fee, providing a valuable new way to access cash on the High Street.

Cashback without a purchase has the potential to be a valuable facility to cash users, and to play an important role in the UK’s cash infrastructure.

John Glen, Economic Secretary to the Treasury

Source: LINK

More: Cashback Without Purchase.

5: COVID-19 Looms Large

COVID-19 caused a sudden shift in our relationship with cash. As shops shut down, usage of the network dropped rapidly. At the height of the first lockdown, cash withdrawals at LINK ATMs were down as much as 80% in some areas and transactions are unlikely to return to 2019 levels.

The drop in the use of cash has not been the same everywhere across the UK and it is clear that that the most deprived communities across the UK continue to rely on cash the most (20% vs 40%).

Source: LINK

And while we are visiting cash machines less often, we are taking out more cash each time we go. Since the pandemic hit, the average withdrawal is more than £10 higherat LINK’s ATMs than in 2019:

Source: LINK

6: Free to use cash machines are expanding

LINK has now funded over 100 free-to-use cash machines in communities that previously struggled to access cash.

LINK has spoken to consumers and identified existing locations for them and, where there has been a problem, visited to learn about the issue in more detail. As a result of this work, over 70 communities now have free cash access that didn’t before.

LINK has published an interactive map featuring the communities where it has funded a new free ATM. This shows the location of the 100+ machines installed so far through LINK’s direct commissioning activity.

Over £75 million has now been withdrawn from those machines. In many cases, people would previously have had to either pay for cash access or travel to get cash.

7: Protecting the ATM footprint

Source: LINK

Since 2018, LINK has been tasked with preserving the geographic spread of ATMs. To do that, it protects free-to-use ATMs that have no alternative for one kilometre and subsidises those in specific deprived areas.

LINK does this by paying additional interchange to protected ATMs, and providing low volume premiums of up to £2.75 to ATMs that have low numbers of transactions.

Over the past three years, the number of free ATMs has reduced by 25%. However, there remains good access to cash across the country. LINK’s financial inclusion work is a key reason behind the fact that over 85% of people live within one kilometre of a free cash machine, as it supports ATMs that may otherwise be under threat of removal.

More about cash 

If you are interested in the use of cash in an increasingly digital (payments) society you might find these additional resources helpful:

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