The Financial Conduct Authority (FCA) has unveiled new rules aimed at ensuring continued access to cash, a move that is expected to significantly benefit both retailers and their customers.

From 18 September 2024, banks and building societies will be required to assess whether local communities are losing access to cash services such as ATMs and bank branches, and take action to address any significant gaps.

As the shift towards digital payments accelerates, cash remains essential for a substantial number of people and businesses.

For many retailers, particularly small businesses, having a reliable way to manage cash transactions and deposit takings is crucial.

The FCA’s new measures seek to safeguard these needs by ensuring that cash withdrawal and deposit services are maintained, even as physical bank branches continue to close.

Assessing cash access for local communities

Under the FCA’s new rules, financial institutions must evaluate local cash access when planning changes such as branch closures or the removal of ATMs.

This ensures that if a community is at risk of losing access to essential cash services, the gap will be identified and addressed. Retailers will benefit directly from this, as many still rely on cash for day-to-day operations.

In addition, customers who prefer or rely on cash will have continued access, ensuring that businesses do not lose trade due to limited payment options.

Local residents, community organisations, and groups will also have the right to request an assessment of cash access if they feel services are insufficient in their area.

Keeping cash services open until alternatives are provided

One of the key features of the new regulations is that banks and building societies must keep existing cash services such as branches or ATMs, open until alternatives are available.

This is particularly important for retailers and other small businesses that depend on daily cash deposits and withdrawals to manage their operations.

For retailers, any disruption to cash services can lead to operational challenges such as the need to travel long distances to make deposits or handle cash.

The FCA’s plan ensures that businesses can continue to operate smoothly while new cash access solutions such as mobile banking hubs or deposit-capable ATMs, are put in place.

Flexible cash access solutions for businesses and consumers

The FCA has made it clear that while its new rules won’t prevent the closure of individual branches, the focus is on filling the gaps left behind.

A variety of solutions are being considered, including shared banking hubs, ATMs with deposit functions, and partnerships with Post Office branches to provide essential cash services.

This flexibility means that retailers, particularly in underserved or rural areas, will have reliable alternatives to traditional bank branches.

Customers who prefer cash, whether for budgeting or other personal reasons, will also retain access to withdrawal and deposit services, benefiting both businesses and their patrons.

Supporting vulnerable customers and businesses

Research by the FCA shows that certain groups, such as those in low-income households and those with limited digital access, are more likely to rely on cash.

For many small retailers, maintaining access to cash services is vital for serving these customers and staying competitive.

The new FCA rules will protect retailers and their customers by ensuring that reasonable access to cash is maintained.

With millions of people still depending on cash for their daily needs, these measures provide security for businesses that operate in areas where digital payments may not be the only option.