Banks are curtailing “cash services.” But why?
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
In Australia, banks are reducing ATMs by about 8% a year. In the UK, ATMs — or cashpoint machines, as they’re termed locally — are disappearing at a rate of around 300 per month, leaving consumers in rural areas struggling to access cash, according to a new report by the consumers’ association, Which? The rate of closures has increased sixfold in the period from November 2017 to April this year from a steady pace of 50 per month since 2015.
Banks in Spain have closed around 40% of their branches over the past ten years, on the back of unprecedented industry consolidation and cost cutting. In Barcelona, there are now less than half the number of branches there were in 2008. But it’s in small towns and villages where the impact is being felt most keenly. According to new research, by 2016 as many as 4,114 municipalities — the equivalent of 50.7% of all urban settlements — had no bank branches at all.
Banks in Spain are are also shutting down many of their ATMs. In 2017, the biggest lenders withdrew over 1,100 cash machines — around 3% of the national total. BBVA, Spain’s second biggest lender mothballed 192 ATMs (2.9% of its total stock) last year; Bankia, 301 (4.8%); Caixabank, 47 (0.5%), and Banco Sabadell 541 cash machines, the equivalent of 15% of its total stock.
This is all happening at a time when banks in Spain are making it more and more difficult to access cash from the branches that remain open. As we previously reported, Spain’s third largest lender, CaixaBank, last year launched a pilot project in Madrid aimed at limiting cash services in their branches to less than three hours a day, from 8:15 am to 11 am.
It’s all part of a broad trend. Bank branches are increasingly becoming so-called “customer advisory points,” where the primary role of branch staff is to sell customers a myriad financial products, many of them costly and/or risky, while curtailing the cash services they offer customers.
Spain’s fourth largest lender, part state-owned Bankia, went so far as to remove all cash services from select branches (including my local branch), forcing customers to travel further afield to another branch that still offers cash services, or withdraw or deposit cash at the ATM. But those, too, are becoming increasingly scarce.
The accelerating disappearance of ATMs follows an unprecedented wave of branch closures as banks abandon towns and villages where they can’t make a large enough profit. But this is not just about saving money; it’s about trying to force a dramatic change in customer habits. The more difficult banks make it for their customers to use cash, the more likely those customers are to turn to alternatives, such as contactless cards and mobile money platforms.
There are fears that the cashpoint cull could accelerate further in the coming months as a result of industry pressures. In July the U.K.’s biggest ATM network, LINK, began incrementally cutting the interchange fee for withdrawals from 25 pence down to 20 pence. Europe’s ATM Industry Association warns that the move will prompt independent ATM operators to shutter around 20% of LINK’s fleet of 55,000 free-to-use ATMS, making life even more difficult for the estimated 3 million Brits who depend on cash for almost all of their day-to-day payments.
Harry Rose, of Which?, said:
“These cuts could see millions of people who rely on cash in their daily lives struggling through these closures — with severe consequences for many communities and businesses. The impact is already clear — with machines closing at a frightening pace.”
LINK defends the move by arguing that its own data on ATM usage reveals a drop in cash use. But others contend that cash usage in the U.K. remains more prevalent than LINK claims, citing statistics from the 2017 Association of Convenience Stores report which show that between April 2016 and April 2017 76% of transactions in 55,000 convenience stores across the country were still made using cash.
The ATM Industry Association in Europe lays much of the blame for LINK’s recent move on the major banks that LINK represents, which want to cut service costs and boost their profits by encouraging the use of alternative payment methods.
“The banks want to drive people to use non-cash payments,” Ron Delnevo, executive director for the ATM Industry Association in Europe, said. “This is because the only way they can cut costs is by cutting services, closing branches, taking out ATMs, and so reducing the amount they pay through LINK. And they’re doing that very fast. Last year, the five big banks took out 2,000 ATMs at their branches and elsewhere.”
The UK may be one of the world’s most cashless economies, pipped to the post only by Canada and Sweden, but its heavy dependence on contactless cards and other forms of digital payments means it is acutely vulnerable to system failure, as was amply shown by a recent outage of Visa payments across Western Europe. The UK was particularly hard hit since Visa’s payment systems account for a staggering £1 in every £3 of all retail spending.
In the wake of the outage, as well as an IT meltdown at mid-sized lender TSB that left millions of customers locked out of their online accounts, people in the UK are apparently stashing more cash at home, according to a new survey by GoCompare Home Insurance. A quarter of the survey’s respondents said they now keep more cash in their house in case similar payment system failures happen again.
The irony is that while many British consumers may have rediscovered the benefits of having some cash on hand following the dramatic events of this summer, actually getting hold of the stuff is likely to get a lot more difficult in the future as more and more branches and ATMs are shuttered. The same goes for Spain, Australia and a host of other countries. By Don Quijones.
People view paying in cash “as a fundamental freedom, which should not be disproportionately restricted.” Read… The EU Backs Off its War on Cash. Here’s Why
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It’s also pretty hard to run on a bank when there’s no branch or ATM to go to.
I’m with Joe.
I just got tired of ATM fees ($2 to withdraw $20, no thanks!) and literally haven’t used one since the mid-90s.
However, paying for groceries and getting cash back is the new ATM I think. No fees and you’re at the market anyway. No shady characters hanging around like at ATMs either.
My boss, though, 15 years older, loves him a good ATM.
I don’t know of a single bank that charges customers a fee for withdrawing cash at an ATM that belongs to that bank. Maybe you got ripped off in the 90s, but even Wells Fargo, whose own ATMs are ALL OVER the Bay Area, doesn’t charge a fee for cash withdrawals.
Wolf – As I said, I got tired of the things in the 90s and I’m not going to give them the chance to charge me their 10% fee, screw ’em.
If they wanted my business now they should have thought about this in the 90s.
Joe,
Even without bank branches or ATMs, bank runs can happen just as easily by having large numbers of depositors take money out of a bank electronically by transferring it to another financial institution like to another bank, a credit union, a mutual fund company, a brokerage, an insurance company, to a Treasury Direct account etc… In fact most money is moved in and out of the banks electronically.
https://www.investopedia.com/terms/s/silent-bank-run.asp
Back in 2008 there was a run on prime money market funds in which investors fled out of them and into safer Treasury money market funds. This run on money market funds was done electronically.
Only capital controls, such as preventing people from closing accounts and limiting the amount one can withdrawal or transfer from their account, can slowdown or stop bank runs.
“by having large numbers of depositors take money out of a bank electronically by transferring it to another financial institution”
If you can’t get cash, you can’t get your money.
Nonsense. And you think cash is money?
det er ikke den eneste grunnen,for at kontanter skal bort,men den største..her skal vi ikke ha noe bank run.
gunnar teisnes,
Please comment in English. Normally I delete comments in other languages.
Here is the Google-translate version of your Norwegian:
“It’s not the only reason for cash to go away, but the biggest..there we will not have any bank run.”
Has it come to this.
Already ??
Under the bed is the only safe place.
Sew it into your teddy :-) you can buy 1 meter teddies.
could credit unions help ? I would think many would join one…
Credit unions could help. It would be better to switch to something that isn’t scandal-ridden than to do nothing.
Unfortunately, most people do nothing. It’s worse than not locking down one’s credit accounts. Most people don’t actively manage their personal finances and basically just let things happen. They don’t balance their checkbooks, pay bills on time, check interest rates, and so forth. Really basic, simple things, but then, personal irresponsibility is very common. It’s not enough to complain about bad bosses, shoddy business practices, and poor governance. Good financial hygiene starts at home.
You might get screwed no matter what you do, but you should at least not make it easy for them.
I no longer have a credit union account b/c I could not get $$ into it and barely get $$ out of it. I am self-employed, could only deposit in person, during their not-generous hours, into their rare locations, and ATMs in their ‘network’ were few and far between. It wasn’t so bad until they combined into some sort of evil coalition with other credit unions to have a unified computer system/ATM network, closed half their branches (down to two from four, neither in my part of the world). Then fees went up, local autonomy became a thing of the past, everything was done according to a ‘policy’ that came from — somewhere. The tellers and the manager at my local were *most* apologetic but said they could do nothing. I didn’t actually close it, but since I couldn’t access it in either direction, the fees ate my balance. I did get a finger-wagging letter, though.
The ATM will go the way of phone booths after the spread of cell phones. Just don’t loose your wallet and cell phone, or you might find yourself begging for a change. However, currency and cash services is a government business, and must be maintained as an essential service with taxpayer money if necessary.
Yes I think you’re right and the logical progression will be the end of cell phones as well. All data will likely be stored on blockchains with access to your data being a combination of bio-metrics and passwords or whatever.
Maximus Minimus – this is why “banking as a utility”, having the postal service provide banking services, or states have state banks, is an idea that keeps hovering around ..
And as for “blockchain” I don’t think any sane individual wants “money” that goes away with any computer glitch or error. I’m considering keeping a minimum of money in the bank and most of my savings in a coffee can as it is.
Crypto
Pickle jars and buried deep – keeps out most anything
Crypto, without juice (power, electrons, etc.) Is fairly useless
Don’t forget oxygen absorbers etc if you’re storing paper bills. “Junk” silver coins are a very good idea.
Pickle jars full of silver coins.
CONTROL.
As is stated in other comments, with far fewer public access points to banks and/or ATM’s, it becomes far easier to prevent runs on banks.
Also, doing away with physical “cash” (notes, coins) is another powerful control tool for the controller’s. As the article says; “forcing people to use mobile platforms” rather than cash. Welcome to the 100% digital age.
Get ready to answer the call to have your RFD chip implanted.
Outlookingin When they call I won’t be home lol
You are jumping the gun. The RFD chip will be enforced only in the next stage of the plan, when the cashless society is fully implemented.
Even without bank branches or ATMs, bank runs can happen just as easily by having large numbers of depositors take money out of a bank electronically by transferring it to another financial institution like to another bank, a credit union, a mutual fund company, a brokerage, an insurance company, to a Treasury Direct account etc… In fact most money is moved in and out of the banks electronically.
https://www.investopedia.com/terms/s/silent-bank-run.asp
Back in 2008 there was a run on prime money market funds in which investors fled out of them and into safer Treasury money market funds. This run on money market funds was done electronically.
Fewer bank branches and ATM’s just means it is harder to get physical cash especially in a crisis.
Do you really want your access to cash to depend on how many bars you have?
you meant to say: how many drinks at the bar you have?
In the UK you can (using a card) withdraw cash in a Post Office. The cash comes out of the Post Office’s till. Also, in many shops you can ask for Cash Back, which is pretty much the same as getting cash out of the Post Office, only you’ve also bought some stuff. Again, the cash comes out the till. So it seems to me the death of the ATM doesn’t necessarily mean the death of cash. Indeed, it might even lead to more local currencies/cash, with shops issuing it and maybe even paying wages with it! No need for banks? As they say, any one can issue money, getting others to accept it is the trick.
I always exchange my cash at the post office in the UK. Much better rates.
Retail banking is a business, not an entitlement. Decisions are made by managers for reasons that relate to the needs of the business.
A perfectly socialist world would require ATMs at convenient places if some downtrodden souls grouped together and demanded it as a matter of equity. The cost of these ATMs would be borne by others somewhere else.
Retail banking is not a war on cash, even though the article above made no mention of this. The War on Cash is a necessity of economies that intend to live on negative interest rates , such as the EU, to prevent capital flight that’s in opposition to negative rates. Fortunately, the US is raising rates so no War on Cash is possible.
You seem to forget that banking is an essential part of the infrastructure of an economy. That’s why it is so heavily regulated. When the banking system collapses, the economy collapses. Shutting down cash services in order to extract more profits and data from every transaction via electronic forms of payment is like shutting down a highway to force people to use the train.
I forgot nothing. A corner retail bank is not an entitlement.
Similarly, bank bailouts, immunity from criminal prosecution, and gaslighted customers are not entitlements either, although banks certainly behave as if they are.
Any financial institution which fails to faithfully serve my needs is short a customer, and that is nearly all of them.
Banking is essential, so is water, sewerage, transport and electricity, but only banking gets to rule the world.
Banks are merely a utility, well they should be merely a utility.
And the establishment does not have our backs.
We are screwed.
Would it have been a good idea if ‘we the people’ started up out own currency just in case ?
I Think you meant, ” A perfectly socialist world would require the populace to bail out failed welfare-queen bankers who demand, in addition to free bailout money, the theft of trillions from the populace through the zero interest rates required for ten years to rebuild the failed bankers equity, in addition to trillions in secret rescues (see Citibank). The cost of the bankers criminal activities would be borne by others somewhere else, other than Greenwhich Ct.”
I just learned that Bank of America customers can no longer make cash deposits to private checking accounts. According to a bank employee, the same will soon be true for business accounts. Apparently you have to purchase a money order to deposit your own money into your own checking account. What a headache this will be for small businesses like vendors at farmers’ markets.
Mary thanks for that It’s Insane and I believe it will fail People know why they want this and they may just push alittle too far Regardless of what the snowflakes think
There are many big businesses that take in plenty of cash each day.
I would not even try and guess how much cash Walmart takes in every day from its 5,400 stores in the US.
Mary,
Just spend the cash on the black market. They’ll show them!
Mary
The new policy only deals with 3rd parties depositing cash into an account for which they are neither owner or joint account owner. Individuals (within long-standing money-laundering rules) can deposit cash in their own retail accounts.
I wouldn’t be at all surprised to see restrictions on 3rd parties depositing cash into commercial accounts (again, heavily influenced by governmental money-laundering controls).
Just link the account to another bank or credit union that does take cash. You can’t ignore the possibility of a reverse run on money center banks whose reserves come through the fed not by deposits. There are a number of catalysts, currency collapse, lower FDIC insurance limits, by getting rid of cash they avoid the sort of ugliness that went with the bank collapse in the 30s. When the building is burning you lead the customers out of the building.
I have done all of my banking at a local credit union for the last 27 years. The primary reason is that in the entire 27 years, I have never paid a fee for anything. As long as you follow the rules (very simple – not designed to trick you!), they do not assess fees for any of their services. The credit union does not engage in speculation or underwriting risky securities. Their business model is very simple; collect deposits and make loans to their own customers. There are risks associated with any depository institution, but they are far fewer at a credit union.
Been with the same CU since 1963 few minor bumps along the road but have always been serviced adequately. That’s 55 years…….
I work at a small savings bank (part time after getting bored with retirement) and we specialize in high yield CDs. We have 5 branches-some with ATMs-but most of our customers are elderly and prefer to deal in cash by coming to a window. WE are starting to see younger customers buying CDs and setting up IRAs. SOME of the younger people are thinking ahead. However, most younger people are just fine with electronic money as it is all they have ever known.
Personally, I like cash as I don’t want the government able to access every dime I spend. I may be a little paranoid as I am not on any social media networks either.
You are right. It is absolutely a matter of age. I’m in my 70s, always carry a lot of cash and am afraid to put any apps on my cellphone because I’m sure they will be used to spy on me.
I do volunteer work with a number of young folk (20s and 30s). They never have cash, and if I offer to lend them a few bucks, they act as if I were offering them a handful of gravel. Virtually all of their day to day business is accomplished on their iPhone. And these are good people; we work on projects together and have no trouble communicating. But it’s another world….
What do you people expect from us? Frankly we’re fed up with you customers. All you do is use us for completing your nickel and dime transactions. Most of you don’t have any savings, and we don’t particularly care if you do.
Did we take a few liberties by opening credit accounts in your name, adding undisclosed insurance to your auto loans, processing your debit purchases out of order to generate a few extra bucks in overdraft fees, signing your name to a few legal papers, etc? You bet! But you got ATMs everywhere in return.
And don’t get us started on ‘predatory’ loans–Ha!! We take your money and you complain…We give you money and you also complain!
ATMs were put everywhere to attract customers in a different era. These days, you ATM-dependent customers are more trouble than you’re worth.
–The Banks
The whole point of the banking business is to get between you and your money in any way that they can, in order to charge you fees to use what was rightfully yours until you “deposited” it with them. They will push as far as their customers and regulators allow them. When an ATM doesn’t generate as much revenue as forcing you to pay card fees, they will push you towards the card fees. As long as people go along with this, they will herd everyone into coughing up more fees, until something snaps.
Personally, when banks try to charge me fees to make deposits, be it coins or cash or checks, I figure they don’t want my business and I make the deposit elsewhere.
However, this trend is yet another sign that the banking business isn’t a sufficiently competitive industry, and the megabanks need to be broken up to force more competition for customers.
But as someone pointed out above, even the end of ATMs doesn’t mean the end of cash. Many people will continue to use cash regardless of ATM availability, since they can readily get cash at stores, doing their routine shopping, using the same debit card they would use at the bank. Maybe not huge amounts of cash, however, so there will be more friction. But if you want more cash, maybe the bank wants to see you come inside so they can sell you something else too…
WS
“…However, this trend is yet another sign that the banking business isn’t a sufficiently competitive industry, and the megabanks need to be broken up to force more competition for customers….”
There are 5,750 credit unions and an additional 6,800 FDIC-insured banks in the USA – that’s one for every 12,500 US citizens (including children).
Exactly how many more banks do you think we need?
Oooops – bad math.
320,000,000 USA population divided by 5,750+6,800=12,500 banks equals 1 bank/credit-union per 25,500 US citizens
I live in a well banked area … and mostly use a credit union and an internet bank that has zero fees for ATM usage.
My point was that if the giant banks felt they had to compete on customer service, there would be better customer service.
BTW, the smaller banks have been losing the competition war; the number of banks in the US used to be far larger (in absolute numbers as well as per-capita).
Here’s the graph for commercial banks:
https://fred.stlouisfed.org/graph/fredgraph.png?g=kT8S
In UK we say either “cash-point” or “cash machine” not really “cash-point machine”
Just chill and drink some soda pop.
Our local branch closed its drive thru. Manager said it was too many scams and semi-highjackings. ATM still functioning.
I have a year-round stall at my local farmers market, where about $100k per year in cash passes through my hands. I also have a side hustle buying and selling old tractors, which is a purely cash business. Most of this gets banked through my credit union,but I try to make local purchases with cash. I notice that many stores, including the local Home Depot,have only one register that accepts cash–the others are card only. It’s not just the banks; it’s also the merchants.
I have great difficulty with the claim Home Depot only has a single register accepting cash.
The 3 Home Depots in my immediate area (FL) accept cash at all registers, and all have 4 “automated checkout” stands that accept cash.
Be very careful if you deal with any cops, even if all they are doing is writing you a traffic ticket. If they ask you how much cash you have, you might not want to tell them.
The “civil asset forfeiture” laws mean that if you have a few thousand dollars in your pocket and a cop finds out, he can simply declare that he think you MIGHT be a drug dealer and can “arrest” your money.
It often takes more time and legal fees to recover such sums than the value of the money that is seized.
This serves three purposes.
First, if you do nothing to fight back, the cops get free cash from you.
The cops win, you lose.
Second, if you do fight it in court, the judges and lawyers and get to keep their courthouse busy and charge lots of billable hours.
The judges and lawyers win, you lose.
Third, bankers and tax collectors hate cash and want to charge a fee or collect a tax for every transaction. Cash allows people to avoid fees and taxes. If the police simply confiscate enough cash, then people will resort to checks and credit or debit cards and there is a paper trail for the IRS to follow.
The bankers and tax collectors win, you lose.
Can you figure out the pattern here?
->Can you figure out the pattern here?
Another good reason not to live in a red state.
I am vehemently blue, but this is NOT a tribal issue. Asset Forfeiture laws are not a blue versus red issue, really. Many of the most vocal “tough on crime” politicians at the local level are Democrats. Although there is increasing pushback by some.
barter
I’m in Canada.
We keep some cash on hand in case of emergencies, but it would be extremely unusual for me to actually carry that cash around with me.
I think I go to an ATM 3 or 4 times per year, usually for oddball situations where somebody can only take cash for some reason.
Our local transit has switched over to a card system as well, so I don’t have to carry tokens any more either.
I completely understand all of the negatives on this one though.
I have a retirement hobby where I hollow out old books (book safe) and sell them at a weekend market. My largest (identifiable) category of customer is fellow stallholders. :D
ATM’s … Who still uses them? I always figure half of them have sniffer software installed on them to steal your pass code. Absolutely refuse to use my ATM card at any gas pump because of that. That and the high fees some banks now charge to use them. Getting cash back at the supermarket is the way to go. Amount just shows up as part of my total purchase.
I am in England and here like everywhere else the bank robbers are the banks themselves…. if they take our cash away it will benefit them and is no use to us… this can happen bit by bit and all at once… I keep as little as possible in the digital world because it can be switched off anytime it suits them..
Banks do not want cash because they do not want to pay employees to count it. Cash coming in from businesses and going out via ATM’s or at the counter. Also have to pay to armed guards to transport it from bank to bank. They have lost their original purpose. Can’t make enough with moving cash around.
The TBTF banks lead the charge to eliminate cash. They only want to trade paper representing other stuff, which does not need armed guards. Tells me maybe it is worthless stuff.
But they can make big bucks in this multi-market, highly non-transparent world.
I just love our banking system. LOL
As far as I know, these days in the US, you give an unsecured loan to the bank, when depositing your money, cash or checks. Moreover, the FDIC reserves are enough to reimburse 50 cents out of each $100 lost to depositors in a total collapse of the banking system (which seems to explain why some banks are “too big to fail.”
Why don’t bank customers vote with their feet and move accounts to banks not implementing these policies? I would in a heart beat and make sure they know why!
Especially now when I can use my phone to deposit checks, I use the banking machine very much less than I used to. If others are like me, I can absolutely see why there would be fewer banking machines. Its about impossible to find a phone booth anymore also.
In UK, england and wales to be prcise, ATMs are subject to business rates. I think i am correct in saying the the Rateable Value (which is the figure upon which business rates payable are based) is a fixed figure regardless of location.
Since the occupier of the premises where the ATM is sited would normally be the ratepayer, any business hoping to make a profit out of the transaction fee would have to allow for the business rates payable. ATMs are a service to customers but not if ATMs end up costing the ratepayer more that it makes.