If you had to pay for cash would you use a digital wallet?

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£730 million in cash was withdrawn on Friday 23 December 2016, an all-time record day for LINK cash machine network.

Despite the prevalence of debit and credit cards, cash is still a major payment method in the UK and online payment providers such as PayPal and Apple with their mobile wallets are yet to make significant inroads into the market. That’s not to say that mobile wallets or indeed contactless cards don’t handle significant volumes, it’s just that they’re dwarfed by cash payments that we still make.

The growth in cash withdrawals has slowed in recent years, but the total volumes are higher than ever before. The growth in transactions processed by LINK (not including transactions made by customers at their own banks’ ATMs) and other transactions such as balance enquiries, PIN changes and rejected transactions are shown below.

LINK transaction history

There is a problem with all the cash floating around out society and that’s the fee you bank will pay a cash machine owner when you withdraw money. All UK cash machines are joined by the LINK network and your bank would much prefer that you use their own machines than pay the fees which are currently at around 25p per transaction.

LINK are currently reviewing their fee structure and banks, especially those with the largest number of customers hence the biggest LINK bills, are unhappy with the fees they currently pay, let along a possible increase.

Options for banks could be only to offer free cash withdrawals from their own cash machines or to join forces with partner banks to give consumers more options. This is the situation we had 30 years ago and whereas today about 75% of cash machines are free to use that might not always be the case moving forward.

If you had to pay to withdraw cash (or find one of your own bank’s cash machines) would it encourage you to use mobile payments or contactless debit and credit cards more frequently?

7 Responses

  1. they stopped paying interest on personal accounts to cover this exact charge, if they want to charge me for it again, i want my interest back, with interest.

    no it wouldnt encourage me to use a digital wallet, it would encourage me to stop putting my cash into the bank in the first place.

    and how does a card reader with a 2.5% charge represent an improvement over a 25p flat charge on a (minimum) £10 withdrawal?

  2. People who use cash have a better sense of how much they are spending and don’t spend what they haven’t got. So it is no wonder banks don’t want us to carry on using it.

  3. Cash will never disapear – and why should it?

    Its convenient, quick and useful – you always know where you are with it, you can budget really easily with it (if you are broke and have £20 a week to live on I would advise taking £20 a week out of a cash machine, you know exactly what you have to spend, instantly), and everywhere takes it – even if their card readers don’t work, or your phone is flat, or the internet connection is down.

    Like all things then society needs a mixture of options – cash is one of them. Similar to delivery options or fleet types they are nearly always a mix, not a one size fits all.

    I don’t see the obsession with getting rid of cash – If I go into a shop and something is £1, what is wrong with giving the guy behind the till a pound coin, nodding and leaving instantly, why do things like buying a paper or a can of coke need to be a digital transaction?


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