News in Brief

Access to Cash a Political Issue in Austria

Austria is looking at including the right to use cash in its constitution. A task force is looking at putting the right to pay with physical money and to guarantee access to ATMs. Austria’s Chancellor has made the statement that ‘people in Austria have a right to cash.’ 

Cash is widely used in Austria and one of the political parties, the Freedom Party, has campaigned in support of cash. The Freedom Party strongly opposes the concept of a Digital Euro.

Another political party, the Socialist Party, has suggested banks should be required to install ATMs, at their own expense, in response to a complaint from a mayor about the cost of maintaining an ATM in his remote village. Austria already has some of the best access to cash in the European Union.

Austria has elections next year, which may explain some of this activity.

Causes and Impact of Financial Exclusion

David Hensley, founder of the consultancy Enryo, has written a blog article for Finextra about the negative impact of access to cash. He discusses the impact of the increase in digital payments pointing out that not everyone has access to the internet or a smartphone, and digital payments can be more expensive than cash.

The closure of bank branches, especially in rural and deprived areas, makes it hard for people to access cash. Again, if they don’t have access to online or mobile banking this has an even bigger impact.

Along with the closure of bank branches, there has been a reduction in the number of ATMs. This is caused by a mix of declining cash usage and higher costs to maintain ATMs.

The impact of these changes is well known – increased financial exclusion, reduced choice, increased costs (people who do not have access to cash may have to pay higher fees for using digital payments), more vulnerability to fraud, rising debt levels due to less control over budgets and easier access to borrowing.

Financial exclusion matters, but the solutions are not straightforward. It is the responsibility of all to think about and put in place realistic mitigations.

Luck of the Irish

One of those unusual technical errors allowed customers of the Bank of Ireland to use their banking app to transfer up to €500 to Revolut accounts, even if they had no money in their accounts.

Social media spread the news of the problem and it appears that many people took advantage of this and then promptly withdrew the money at ATMs. Queues formed at some as a result. The bank is now applying transfers and withdrawals to those who took advantage of the mistake.

Ireland’s Minister of Finance wants a review of banking technology infrastructure following this incident. Bank of Ireland was fined €24.5 million over IT deficiencies in 2021.

Cash Slides in Israel at Point of Sale

Israel’s payment processing company that handles credit card payments has reported that credit card spending increased 6.2% in the last year to NIS 41.2 billion, up from NIS 38.8 billion in July 2022. At the same time, cash withdrawals from ATMs fell 5.5%. Israeli law limits the size of cash transactions to NIS 6,000 for businesses and NIS 15,000 for private citizens.

Online transactions rose by 8.2% to NIS 24.1 billion but, despite that, the number of purchases made in physical transactions rose by 3.47% compared with last year. Face to face credit card transactions rose by 3.47% to 17.1 billion between July 2022 and July 2023.

Clean Note Policy Issued in Bangladesh

The Department of Currency Management at the, Bangladesh Bank (BB), the country’s central bank, has issued a clean note policy with the aim of allowing defective and obsolete notes to be withdrawn from circulation. BB will carry out random surveys to set appropriate definitions of what is a defective or obsolete note.

The policy aims to ensure compliance on note sorting, packing, banding and putting flyleaves on note packets. It will include guidance on not stapling notes.

Security Printing Corporation of Pakistan (SPCP) will be required to establish the actual demand for new notes in circulation. SPCP will increase its note printing capacity to match the demand for new notes. It will also invest in modern note sorting machines in all BB offices, increasing capacity to process notes. This will include investment in note shredding capacity.

BB, along with partner commercial banks, will run a public education programme to increase public awareness about the need to look after notes.

Cash Demand Rises in Estonia

In the second quarter of 2023 the number of coins in Estonia grew by 55% compared with the first quarter. The number of coins returned to the Bank of Estonia fell by 42%. The central bank is considering introducing the rounding up of prices to reduce the use of one and two cent coins.

The number of banknotes issued rose by 26%, largely €50 banknotes. 9.2 million banknotes were issued and 6.5 million returned to the central bank, of which 1.7 million were destroyed as unfit for reissue.

The number of cash withdrawals at ATMs also rose, up 13%, while the number of cash deposits rose 10%. 62 counterfeit notes were registered with the Estonian Forensic Science Institute.

Interbank ATM Withdrawals Made Easier in Vietnam

The National Payment Corporation of Vietnam (NAPAS), the payment intermediary licensed to provide financial switching and electronic clearing services in Vietnam, has allowed cardholders to utilise their Mobile Banking application to perform interbank cash withdrawals from ATMs by scanning the VietQR code, eliminating the need for a physical card.

Eight commercial banks are members of the scheme, allowing users of their apps to withdraw money from their respective ATM systems. These banks offering the VietQRCash service account for over 60% of the total ATMs currently available in the market.

This development is part of a plan to digitalise bank-related payment products and services. Non-cash payment transactions grew by over 51% during the first half of 2023 compared to the same period last year. The use of QR codes increased by nearly 136% in terms of transaction volume.