People in the UK will be able to get cashback from shops without needing to buy anything under new proposals to protect the UK’s cash system announced today.

The Treasury has set out new plans which would also give the Financial Conduct Authority (FCA) overall responsibility for the UK’s retail cash system to protect consumers and small businesses.

Although cash use is declining, with people increasingly choosing cards, mobile and e-wallets to make payments, it remains crucial for groups across the UK - including the elderly and vulnerable.

In the March Budget, the government stated that it would legislate to protect access to cash and ensure that the UK’s cash infrastructure is sustainable in the long-term.

It is now seeking views on the approach to this legislation from consumer organisations, businesses, financial institutions, providers of ATM and payment services and others through a call for evidence.

This consultation runs for six weeks, looking for views on how to ensure industry continues to offer ways to withdraw and deposit cash, how to improve cashback, what affects cash acceptance, and where regulatory responsibility should sit.

One proposal under consideration is cashback without a purchase, which could help to keep cash widely available by reducing cash infrastructure costs. When local shops accept and dispense cash, it is recycled through local communities and there is less need to transport and distribute notes and coins via cash centres, which reduces the associated costs.

Last year, consumers received £3.8 billion of cashback when paying for items at a till – making it the second most used method for withdrawing cash in the UK behind ATMs.

A statement suggested that current EU law makes it difficult for businesses to offer cashback when people are not paying for goods and this has been a barrier to widespread adoption. The government is now considering scrapping these rules once the transition period ends on 31 December.

John Glen, economic secretary to the Treasury, said: “We know that cash is still really important for consumers and businesses – that’s why we promised to legislate to protect access for everyone who needs it.

“We want to harness the same creative thinking that has driven innovation in digital payments to maintain the UK’s cash system and make sure people can easily access cash in their local area.”

The government is also considering giving the FCA overall responsibility for maintaining the retail cash system, given its existing regulatory role and consumer protection objective.

At present, The Bank of England, FCA, Payment Systems Regulator and the Treasury each have specific roles and responsibilities for oversight of the cash system.

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