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Mastercard announces new cashback initiative for UK shoppers

Retailers will be paid a small fee for dispensing cash to customers

Payment provider Mastercard will pay shops to dispense cash to customers, in a bid to protect the use of cash on the high street.

From April 2020, local shops and businesses will earn a small fee every time customers request cashback from the till in conjunction with a purchase on a Mastercard debit card.

Mastercard hopes this will encourage more shops to dispense cash, and help plug the gap left by the UK’s rapidly shrinking ATM infrastructure.


How will Mastercard’s cashback scheme work?

From next April, Mastercard will pay retailers 12p every time they dispense cash to a customer who is spending on a Mastercard debit card.

Mastercard hopes this will make businesses more likely to offer cashback, giving more people access to cash, which is particularly vital in areas with no ATMs or bank branches.

While most high street banks issue Visa debit cards, many new and challenger banks issue debit cards from Mastercard, including Clydesdale Bank, Metro Bank, Monzo, N26, Starling Bank, Virgin Money and Yorkshire Bank.

Why access to cash is important

While digital payments are growing in popularity, there are still millions of people who rely on cash in their daily lives. Among these are Gem Turner, who uses cash to pay for wheelchair-accessible cabs, and Stella Hurley, who runs errands for elderly neighbours.

Yet Which? research has found that both ATMs and bank branches are closing at a staggering rate, making it harder for people to access the cash they need. In September 2018, Which? revealed that 3,000 bank branches had closed since 2015. In Scotland, one third of all bank branches have closed since 2010.

Free-to-use cash machines are also disappearing, with over 1,250 free ATMs beginning to charge fees in March 2019 alone.

The interactive map below lists all bank branch closures between 2015 and January 2019.

At the same time, the digital banking capabilities are vulnerable to outages.

Last year’s Visa outage caused chaos, as many people who had switched to digital payments were left with no way to pay for anything. Which? has previously found that at least one major UK bank suffers an IT outage every day.

Will the scheme help protect access to cash?

Which? has been campaigning for regulators to take action to protect cash since 2017.

While the Mastercard scheme is a welcome development, its impact remains to be seen.

Gareth Shaw, head of money at Which?, said: ‘Action to help the many consumers who have been stripped of access to cash is long overdue, but we need to see much more detail about how schemes like this will work in practice.

‘While a step in the right direction, cashback can only plug some of the gaps in Britain’s broken cash infrastructure, which is why the government must introduce legislation that guarantees consumers can continue to access cash for as long as it is needed.’

What else is being done?

Mastercard is the latest private company to announce an initiative to protect access to cash.

Last month, ATM provider Link promised to guarantee every UK high street at least one free cash machine. This came after Which? warned that proposed changes to Link’s fee structure could lead to a rapid decline in free cash machine numbers. (Link didn’t go ahead with the fee changes.)

In May, the government pledged to defend cash for those who need it. It appointed a new group to oversee the cash system. Which? has urged the government to back up its pledge with legislation.

But there’s still work to be done. You can join our Freedom to Pay. Our Way campaign, and sign our petition.

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