News in Brief

Access to Cash Assured at UK Post Offices

A new agreement has been signed between the UK’s Post Office and 30 banks and building societies to allow customers to continue to access basic banking services in post offices.

The agreement, known as Banking Framework 3, lasts until 2026 from January 2023.

About £3 billion a month is deposited or withdrawn from post offices.

Estonia Considers Coin Rounding

Eesti Pank, the central bank of Estonia, issues cash information every quarter giving a snapshot of the changing situation. Estonia is considering coin rounding given that 40% of the coins returned to the bank are one or two cent coins. Finland, Belgium, the Netherlands, Ireland and Italy have already introduced rounding rules for shop purchases and Slovakia joins them in July.

In the fourth quarter, the volume of cash issuance was down 26% on the previous quarter at 6.7 million notes but the number of notes destroyed was 1.2 million, 31% of the notes that were returned to the bank. One can’t draw firm conclusions about cash in circulation or note life from this data, but this suggests cash volumes are growing.

The number of ATM withdrawals was down compared with a year earlier by 6%, although the value withdrawn was up 8%. ATM cash deposits were up 10%. 209 out of the 695 ATMs accept cash deposits.

Only 4% of people are paid in cash. A financial behaviour survey in September 2021 showed that only 3% of people use cashback and 3% use bank branches to access cash. 89% prefer to use ATMs to access cash.

Only 45 counterfeit notes and 15 counterfeit coins were registered in the quarter.

Italy Limits Cash Payments

From 1 January 2022 the Tax Decree introduces new measures in Italy to stop people paying more than a €1,000 in cash, down from €2,000. The goal is to reduce tax evasion and money laundering.

Only traceable means of payment are allowed, even between individuals. The only exception is for immediate trading of foreign currency payment methods, for which the cash ceiling remains at €3,000.

Banks are required to support transactions to the Financial Intelligence Unit of the Bank of Italy if they believe they are illegal. The law sets out two different ‘methods’ of punishment.

First of all, people will be reported to the Revenue Agency, who may decide to investigate under anti-money laundering rules. Secondly, there will be a fine in line with the Decree-Law number 90 of 2017 of €1,000 or more depending on the value of the payment. For professional criminals, the fine will range from €3,000 to €15,000.

App Access to Cash in South Africa

In South Africa, MTN’s mobile money app (MoMo) has launched some new cash related functions to make it more attractive to consumers.

Customers can now withdraw cash with a value between R50 and R3,000 using Nedbank ATMs or participating shops at reduced fees. They use the app to request the withdrawal and receive a voucher number via SMS along with a PIN code. These are then used at the ATM or shop, so long as it is between 7am and 6pm. Consumers have 30 days to use the voucher.

European Banks Increase Fees to Sustain Profits

Negative or low interest rates have driven a fall in bank profitability across Europe. The response is rising fees for a range of services.

Spain’s Caixabank is charging customers €2 if they use a branch for something they could have done online. During the pandemic deposits increased, but these have become loss-making for banks due to negative interest rates. Caixabank has recently bought Bankia, bringing it 7 million new customers. Debit card payments using non-Caixabank debit cards cost €36, up from a previous fee of €28. Again, the rationale given is to sustain profitability, as lending revenues fell 2% in the first half of 2021 compared with 2020.

Similarly, Spain’s BBVA charges €2 to withdraw less than €2,000 at a branch, while Santander will charge some clients up to €240 a year just to maintain a bank account if they don’t meet certain conditions.

Almost counterintuitively, in Germany DKB bank is now charging new customers fees on accounts with more than €25,000 euros. From March ING customers will be paying €0.99 a month for debit cards, as well as a €4.90 charge a month for accounts.

Italy’s consumer association, Altroconsumo, has found that the cost of bank accounts with home banking services increased by an average of 11-15% in 2021.

European Banking Association data shows why the fees are being introduced. As of end-June 2021, the ratio of Spanish banks’ net fee and commission income to their total net operating income was around 25%, below the 32% average for European banks and well below the almost 40% for Italian banks and 37% for German banks.

The impact, of course, falls mainly on those who can least afford it.

Cash Often the Only Payment Option in Germany

A German YouGov poll of 2,069 representative adults in December 2021 found 36% of Germans generally preferred cash payments, while 23% said they only used cash when cashless payments were not possible. In a reversal of what is normally reported in such surveys, 45% of respondents said that at least once in 2021 they had had to pay cash because alternative payment methods were not possible.

The findings were that 29% of respondents said using cash gives more control.

Checking accounts using a banking app on a smartphone is the main use of such apps. 24% used an app to check their account but 42% used a computer and 15% used both. 13% did not check their account digitally. Answers about transfers and standing orders were similar.

The survey was carried out on behalf of the Volks- und Raiffeisenbanken, who are members of the Co-operative Association.