Visa plans to roll out scheme to boost number of retailers offering cashback

Visa is encouraging more banks to get behind a scheme which boosts access to cash, following a pilot launched with Lloyds last year.

The initiative aims to increase the amount of places where cash is available by incentivising shops and businesses to offer cashback to customers using their Visa debit cards.

A pilot scheme was launched in partnership with Lloyds Banking Group in 2019.

Visa said it is now making the cashback initiative available to all of its debit card issuing partners.

The new cashback incentive will target areas of the UK where access to cash has been identified as being more difficult, such as the most remote and rural locations.

It will also encourage people to visit and shop in their local communities, Visa said.

ATM and bank branch closures have fuelled concerns about people’s continued ability to access cash easily.

Other initiatives to help preserve cash access include a “request an ATM” service set up by cash machine network Link, enabling communities to directly ask for an ATM in their area.

The Post Office also helps to plug some gaps in the system.

It has an agreement with banks which enables people to do their day-to-day banking through its branches.

Jeni Mundy, managing director, UK and Ireland, Visa, said: “The popularity of digital payments continues to surge across the UK, however we know that cash still plays a vital part in the lives of many.

“This is why we want to help increase the number of options that people have to gain access to cash, helping to extend financial inclusion by enabling customers to choose how they pay – be that by cash, cards, mobile devices or other means.

“We also hope our scheme will encourage people in the target areas to visit their local shops at a challenging time for retailers.”

Vim Maru, group director, retail bank, Lloyds Banking Group, said: “Lloyds Banking Group maintains the biggest branch network of any bank in the UK and is committed to ensuring access to cash, including a free-to-use ATM network alongside other ways of accessing cash locally.

“Through the cashback pilot we’ve been running in partnership with Visa since early last year, we’ve improved the availability of cash in local communities, particularly in areas under-served by free-to-use ATMs and where consumers’ access to cash may be restricted.

“We’re delighted that Visa is now encouraging all of its bank partners to get behind the scheme and create a cashback system that both rewards retailers and protects access to cash.”

Under the cashback scheme, cash incentives will be passed from Visa’s partner banks to the merchants’ banks. The expectation is that this incentive money will be passed on to the merchants.

Federation of Small Businesses (FSB) national chairman Mike Cherry said: “Innovation is critical to maintaining access to cash. It’s encouraging to see banks and card providers working together – through the small firms that are at the heart of communities – to find new ways to support vulnerable consumers who risk being financially excluded.

“However, it’s important that the financial incentives on offer to small retailers are sufficient to cover the costs and risks associated with providing cashback.

“Banks must do the right thing on this front, and it’s a shame that fees cannot be paid directly to small firms participating in this initiative.

“Done well, this model provides a lot of promise – a win-win for both small business owners and customers alike.

“But it needs to be kept under review – and we look forward to those involved providing regular updates on adoption rates among businesses of different sizes and analysis of how efficient the proposed fee model is proving to be.”