News in Brief

FedCash E-Manifest Service Delivering Benefits

The Federal Reserve has started a publicity campaign for its FedCash E-Manifest Service. The new system digitises what was a paper system and FedCash suggests its benefits are:

Improved resilience through greater visibility of package contents and data sharing capabilities
Accelerated dock exchanges using API technology to validate data exchanges and eliminate paper-based processes
More efficient reconciliation by leveraging electronic data
‘Going green’ by reducing dependency on paper deposit tickets and manifests
Future automation opportunities, such as expedited reporting and leveraging data for enhanced efficiencies

NCR Expands Operations in New Zealand

NCR is to run the ATM network of New Zealand’s Kiwibank. NCR has been providing managed services and solutions for 11 years, but it will now take on operational management and maintenance of in-branch and offsite ATMs.

Over 200 ATMs will be added to NCR’s Allpoint Network in the country from 2024, giving the bank’s customers surcharge-free access to a much larger network.

Understanding the Underbanked in Developed Countries

An interesting piece in blanklock.blog.com looked at those who are underbanked in developed countries. The article makes the case for this being a niche market that could be profitably served.

It gives a number of reasons for people being underbanked:

Niche needs. Highly specific requirements that don’t justify dedicated services or products
Risk considerations. The economically viable cost of servicing a level of financial risk is too great
Compliance complexity. The regulatory compliance burden for some groups is too great to serve cost-effectively. The penalties for getting it wrong are too great.

What makes this worse is that financial institutions are increasingly monitoring the individual profitability of each customer. If one financial institution rejects a customer, others follow their example.

The article gives examples of each group and examines the consequences for them and society.

Teething Problems for BOJ New Series

The Bank of Jamaica (BOJ) issued its new polymer banknote series on 15 June. However, not all commercial banks had made the necessary changes to their Automated Banking Machines (ABM). The issue seems to be more with the acceptance of the new notes than with their issue.

National Commercial Bank Jamaica, for example, had enabled 290 of its 300 ATMs to issue notes but only a half of its 134 ABMs that accept deposits. All ABMs should have been converted by the end of August. The Bank of Nova Scotia Jamaica also had some machines that are unable to process the deposits of these notes.

The BOJ has responded to reported problems with its new note issue. As ever, five reported defective notes led to significant publicity. Despite that, the BOJ has had to respond, and one measure is protocols, being developed with the commercial banks, about how to handle any recurrence of the problem.

Move to Digital Accelerates in Australia

Australia’s fifth largest bank, Macquarie Bank, has announced that from November 2024 it will no longer handle cash. It will also end cheques. Over the phone payments will end in January 2024 and cash and cheque contributions to banking and wealth management products, such as pensions, will stop. From May depositing and withdrawing cash and cheques over the counter will stop. The bank is going fully digital.

UK Prime Minister Refuses to Back Payment Choice

The Prime Minister of the UK, Rishi Sunak, has ruled out forcing shopkeepers to offer customers the option to pay in cash. He said that it wasn’t appropriate for the government to impose on individuals how they should do business.

This use of a libertarian argument could have been used to justify the right of people to have a choice about how to pay, but he chose to side with business over the citizen. The UK government has introduced legislation to support access to cash.

Steady Sustainability Progress in UK Cash Cycle

The UK’s Cash Industry Environmental Charter Group (CIEC), which consists of 30 organisations active in cash, has reported on its progress. Highlights include:

Trialling a new kind of security seal for banknote cages which has only a small security tag that has to be discarded after each time it is used. If successful, this would reduce the plastic used in seals by about 60%. The used seals are also recyclable.
Barclays Bank has reduced paper usage by 60% since 2020 by stopping staff print unless they can prove a specific need to do so. An internal audit has revised what constitutes an acceptable audit trail as a result.
The Royal Mint has built a new solar farm and added an additional wind turbine, a combined heat and power plant and a battery storage facility. Its aim is to generate 70% of its own power on-site. It is building a precious metals recovery plant for use in a range of jewellery.
Coventry Building Society, working with G4S, will roll out a scheme to remove small plastic coin bags to save 250,000 single use plastic sachets each year.

The philosophy of the CIEC is that we can’t do everything – but we can all do something.

Cash Transactions Rise in the UK

UK Finance has reported that the use of cash rose in 2022 for the first time in ten years. 22 million people only used cash one a month, or less, while only one million people mainly use cash.

It appears people are becoming comfortable with paying for low value items using cards rather than cash, with debit card payments being used for 57% of transactions. Since 2012 debit card payments have increased almost in a straight line from about 7.5 billion transactions to 22.7 billion. Although the pandemic interrupted this rise, the 2022 number is back on trend.

Over the same time, cash transactions have fallen from over 20 billion to 6.3 billion, 14% of the total. Cash transactions rose 7% in 2022 compared with the year before.

The number of credit card transactions were 4 billion in 2022, remaining relatively static.