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Promised Legal Protection for Cash is a Further Nail in its Coffin

Sami July 12, 2022

 Promised Legal Protection for Cash is a Further Nail in its Coffin

This article first appeared in News Uncutty and is republished here with permission of the author.The Queen's speech, delivered on 10 May 2022, promises legal protection for access to physical cash. A new Financial Services and Markets Bill (the 'Bill') claims protection. One can be forgiven for believing that this will ensure financially viable and convenient services for withdrawing and depositing cash for both consumer and business users.

 However, the lobby pack issued in the name of the Prime Minister  clearly states the related objective is 'to ensure that people across the UK are able to easily access their cash.' This phrase holds the seeds for the continued destruction of physical cash, and here's how: 

  • It accepts the current, degraded level of service as standard, assuming that 'people' can easily withdraw their cash when they cannot. 
  • It ignores the deposit side of the equation No mention of UK's 5.6 million private businesses as cash users So, there is no mention of needing to deposit cash if businesses have to accept it. 
  • Businesses have no obligation to accept cash A major advantage for businesses accepting cash is no acknowledgment - the business receives the full face value of the sale and not the very significant deduction-to-face-value levied from the sale price when payment cards are used. 

If the business can receive a portion of that cash as conversion or pay suppliers, they experience no bank fees and no deductions—which may not be allowed.

 These deductions, occurring on all payments using a card from PayPal or a recognized brand (Visa, MasterCard and to a lesser extent Amex), are a significant source of income for banks, and they are a significant source of income for a wide range of other markets. feed the ecosystem. actor. 

The increase in online shopping and the reduction in the use of cash and checks (due to the policies of banks according to the preferences of consumers and businesses) have dramatically increased this involuntary relinquishment by businesses of their sales revenue: a contemporary coin flip. equal . Oddly, the payment using new, digital technology is more expensive: the expense first falls on businesses as a deduction, which is passed on to other businesses and consumers in the form of higher prices. Digital payments are inflationary. 

The result is that the scope of protection provided by the bill, would be the current arrangement of hundreds of bank branches later. Automated teller machines have been shut down after banks made it extremely difficult for people and businesses to deposit cash, and the Visa and MasterCard ecosystems put a lock on UK payments to their business advantage. Unfortunately, organizations representing the interests of users have joined in the applause. Which one? The Bill is appreciated as a result of its publicity. In the context of 'vulnerable groups', it has also fallen into the trap laid by enemies of cash, which means proponents of digital payments including payment systems regulators or 'PSRs'. 

The purpose of PSR is explained in their 'Access to Cash' workstream: 'To support access to cash for UK consumers who need it. This formulation repeats all exclusions of the words lobby pack and goes one step further. The universe of consumers that can be defined as 'needing access to cash' may be much smaller than the UK's 70 million residents, bypassing the universe that 'want access to cash' and those Ignore people whose view may be that cash is a common method of payment, it should be their choice whether to use it or not and when and when HMT Treasury, Bank of England, group of payment technocrats or whatever Are. 

Introducing a test of 'need' allows payment technocrats to narrow the initial definition of the number of people affected and further reduce the number through the introduction of their substitute products. Options are presented in last week's report on PSR's 'Digital Payment Initiative'. The initiative was launched 'in response to last year's Access to Cash Working Group recommendation to further work on enabling digital payments.' 

It is humbly acknowledged that the group charged with protecting access to cash should instead promote digital payments. Substitute products naturally include offerings in which the major card brands are market actors. The main PSR panel responsible for the report and its sub-committee are heavily represented by the payment card ecosystem. 

Another option is the government's central bank digital currency, also known as Britcoin. The Bank of England panel examining Britcoin includes the same individuals and more organizations that sit on the PSR panel and its sub-committee, as well as several other representatives from the payments card ecosystem.

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