British banks are now making it harder for customers to even deposit cash in their own accounts, while three of Australia’s Big Four banks are eliminating cash services altogether from many of their branches.
First up: the UK. Given the self-inflicted harm NatWest has already sustained in the still-simmering Nigel Farage debanking scandal, the latest revelation from which suggests that more than one million bank accounts have been closed in the past four years, one might expect that the “Big Four” lender would be doing all it can to win back the hearts and minds of its customers. But no. Instead, NatWest has decided to make life even harder for them by imposing new conditions “giving [the bank] the right to set limits on inbound and outbound payments”. As the Daily Telegraph reports, the bank has awarded itself “sweeping new powers” to limit cash deposits and withdrawals, fuelling fears that banks are steering customers towards a “cashless society”:
In a leaflet [Natwest] said [the new conditions] could include imposing “daily and annual” cash withdrawal and deposit limits and “limiting the amount of cash” paid in or taken out.
The move has raised fears that increasing curbs on the use of paper money across the system could have negative consequences for consumers.
It comes amid a wider scandal over “de-banking” after Nigel Farage revealed that Coutts – which is owned by NatWest Group – had closed his account because it disagreed with his political views.
NatWest said it was making the change to “protect our customers from the risk of fraud” and that it was nothing to do with limiting customers’ access to cash.
Of course not, what a thought!
Worth recalling is the fact that the UK government is still NatWest’s largest shareholder with a whopping 39% stake — a lingering hangover from the State’s £45 billion bailout of the lender, then known as Royal Bank of Scotland, in 2008. As such, the government, which claims to be working on legislation to “protect” access to cash while allowing retailers of all sizes to reject cash payments, is, at the very least, tacitly complicit in NatWest’s latest hostile act against its own customers. It could also be argued that UK taxpayers are, to a certain extent, funding their own financial repression.
Leading the Charge Toward a Cashless Future
The UK is already one of Europe’s most cashless economies, with physical money accounting for just 17% of retail payments, compared to 56% in 2010. As in many countries, the move away from cash accelerated sharply during the first two years of the pandemic, largely due to the explosion in online purchases during the lockdowns and overblown fears about the health risks of using cash — fears first raised by the World Health Organization and then seized upon and massively magnified by the media, banks, payment processors, fintech firms and other cash assassins.
But as I reported this time last year in “Is Cold, Hard Cash Making a Comeback?“, the trend may have already reached its apogee. Survey after survey has shown that the overwhelming majority of UK citizens do not want to live in a fully cashless economy. In fact, only 3% of the population have gone fully cashless, according to a recent YouGov poll commissioned by the ATM network provider LINK. Only 12% want to live in a cashless society while 69% oppose it. In a similar survey by BusinessComaparison, 74% of respondents reported using cash over the previous month.
The volume of notes in circulation has actually increased by around £11 billion since 2020, to the current total of just over £81 billion, though this is apparently more due to people “hoarding” cash (as the central banks call it) during the early months of the virus crisis than actually spending it. That said, cash remains the preferred choice of payment for millions of people and is the only choice for an estimated 6% of the population, with this figure increasing to 9% for those in vulnerable circumstances, according to UK Finance.
In other words, the pandemic may have accelerated the shift from cash to digital, but cash is still hanging on in there. So, the cash assassins are doubling down. And leading the charge, as always, are the country’s biggest banks.
They have motives aplenty for wanting to kill off cash. For a start, cash is expensive to manage, store and transport. Banks would much prefer their customers to use their digital payments and digital banking infrastructure, which are cheaper to run, require far less labour, generate fees and interest and have the added bonus of generating reams of data about their customers’ earning, spending and saving habits. Also, people tend to spend a lot more with digital payment methods, as Brett Scott, a journalist, financial analyst and cash advocate notes in his book Cloud Money:
“[O]ne of the big reasons why the cashless society is promoted is that people spend 25-40% more with digital payments — this is good for big business, but not good for ordinary humans.”
The Big Nudge
In the UK, the banks have already closed some 5,000 bank branches over the past eight years — at a rate of around 54 per month — and 15,000 cashpoints, or ATMs, over the past five, with hundreds more scheduled to close this year. This has created a self-reinforcing feedback loop, noted Scott in a 2018 article for the Guardian:
There is a feedback loop going on here. In closing down their branches, or withdrawing their cash machines, they make it harder for me to use those services. I am much more likely to “choose” a digital option if the banks deliberately make it harder for me to choose a non-digital option.
In behavioural economics this is referred to as “nudging”. If a powerful institution wants to make people choose a certain thing, the best strategy is to make it difficult to choose the alternative…
Financial institutions… are trying to nudge us towards a cashless society and digital banking. The true motive is corporate profit. Payments companies such as Visa and Mastercard want to increase the volume of digital payments services they sell, while banks want to cut costs. The nudge requires two parts. First, they must increase the inconvenience of cash, ATMs and branches. Second, they must vigorously promote the alternative. They seek to make people “learn” that they want digital, and then “choose” it.
It is also true that cash’s days may well be numbered in many countries anyway as a result of technological advances and generational preferences. But there is a whole world of difference between a natural death and euthanasia!
Now, the large banks in the UK are making it increasingly difficult for people to not only deposit cash in their branches but also use the intermediary services offered by the Post Office, which, ironically, were established to fill some of the yawning gaps in basic financial services left behind by the banks’ mass culling of branches and ATMs…
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Nick Corbishley 