Reports of cash’s demise are greatly exaggerated

Even in Sweden – supposedly leading the way to a cashless society – cash is widely used for smaller purchases. As the UK is not withdrawing cash, we will continue to use it where appropriate or convenient so I see no demise, just a continuing reduction in use (like cheques).

We can greatly improve access to cash by using businesses and retailers that rely on cash – just arrange for them to dispense it through a debit card transaction. There is no fundamental reason why only ATMs are the main source. We just need to keep open minds, This would give access to cash to a far greater number of people who have never been close to a post office, bank branch or ATM. Let’s think about the whole community, not just preserve the convenience of a part of the population. this has been proposed in previous Convos and in the “Access to cash” report – March 2019.

Glad to see some constructive thinking on this.

The history of the ATM introduction is interesting. For a start the idea of out-of-hours cash distribution developed from the bankers’ needs in Japan, Sweden, the United Kingdom, and the United States. Note it was the ‘bankers’ needs’, not the customers’.

The Japanese device was called “Computer Loan Machine” and supplied cash as a three-month loan at 5% p.a. after inserting a credit card. The device was operational in 1966. In the UK the first cash machine was put into use by Barclays Bank in its Enfield Town branch in North London, United Kingdom, on 27 June 1967.

Adrian Ashfield invented the basic idea of a card combining the key and user’s identity in February 1962. This was granted UK Patent 959,713 for “Access Controller” in June 1964 and assigned to W. S. Atkins & Partners who employed Ashfield. The first modern ATM was an IBM 2984 and came into use at Lloyds Bank, High Street, Brentwood, Essex, the UK in December 1972. The IBM 2984 was designed at the request of Lloyds Bank. The 2984 Cash Issuing Terminal was the first true ATM, similar in function to today’s machines and named by Lloyds Bank: Cashpoint.

Now when we discuss the immense costs of building and running ATMs it’s worth looking at some facts. The vast majority of ATMs worldwide use a Microsoft Windows operating system, primarily Windows XP Professional or Windows XP Embedded. So not a huge cost for the software, then. In fact, business owners often leased ATMs from service providers. However, based on the economies of scale, the price of equipment has dropped to the point where many business owners are simply paying for ATMs using a credit card.

So even the machines don’t cost that much.

And we should remember the banks use the existence of ATMs to justify their wholesale closures of branches. There’s an argument that suggests many who currently bank with one bank did so because they were seduced by the bank in question many years ago. A big selling point was the ubiquity of their branches.

Now, they no longer exist and they’re also trying to remove the cash machines. Why? Because they want more money for themselves.

We seem to have a rather curious view of banks. Instead of giving us “free” banking, were they to pay a market interest rate on our money that they hold – say 3% – and our average balance is £500, we’d make £15 a year. They would then charge for the services that they provide – handling cheques in and out, incoming payments, our regular direct debit payments for council tax, insurance, subscriptions….. action our instructions to make online payments at any time of the day and night, message us when a due payment might take us overdrawn, maintain the existing branches and staff, provide and service ATMs, provide a debit card system, give us monthly statements……………… Would £15 a year cover it?

Maybe we should be given a market interest rate but then pay for each of the services we use and transactions we make.

And if your balance is considerably more does that mean this compensates the ‘average’ £500? Low interest rates have enabled the banks to recover from the mess they created in 2007/8 through indiscriminate lending and investment practices, unfortunately at the expense of the saver.

The whole point being the amount of interest paid by the banks Malcolm.