Removing ATMs: Why banks are pushing for a cashless society

The number of ATMs around the world has fallen rapidly in recent years. What is behind this phenomenon and what are the risks?

With the end of the Covid-19 pandemic seemingly in sight, economists are starting to estimate the fallout and the long-term consequences for our society. One such impact is the acceleration of cashless payments; more and more cashless payment options are now available, and although this proved helpful to many consumers during lockdowns in the first stages of the pandemic, when it was sometimes difficult to pay by cash and many people switched to online shopping, millions more were simply (and illegally) refused cash payments in the following months. 

Moreover, the drop in withdrawals during the pandemic has encouraged banks to close even more branches and ATMs. According to a Commons Library briefing, the total number of bank and building society branches in the UK fell by 34% between 2012 and 2021, and the number of ATMs in the UK has fallen by 25% in just the last six years, while many of the remaining ATMs have been replaced by machines that charge a commission. Meanwhile, the Netherlands has experienced one of the sharpest declines in ATM numbers due to the recent consolidation of the Dutch banking industry, and the USA and Canada are also starting to see the same trend.

This is doubly problematic because, as well as piling pressure on the embattled merchants who lack the cash reserves to operate their businesses and are effectively forced to pay credit card companies a commission, it puts vulnerable sections of the population at even greater risk. These people – disproportionally poor, elderly, or disabled citizens – often can’t afford or are uncomfortable using digital payment methods and are completely dependent on cash, and without easy access to ATMs, it becomes increasingly difficult for many to buy everyday essential items.

This issue is particularly marked in rural communities, where limited broadband or 4G coverage also makes digital payments impractical. Similarly, access to cash empowers victims of domestic abuse to leave their abusers. “Millions of people in the UK are reliant on cash and would massively struggle without it,” says Labour MP Jim McMahon. Impoverished sections of the population, who are already have trouble making ends meet will find it more and more difficult to manage their money and will be faced with the double whammy of struggling to withdraw money and being charged for the privilege. “Everyone should have reasonable access to their own money without having to pay,” says Gareth Shaw, head of money and consumer protection group Which?.

The Executive Director of the Financial Conduct Authority (FCA), Sheldon Mills, has called on the banking industry to protect access to cash, and UK Chancellor of the exchequer Rishi Sunak committed to doing exactly that in the 2020 budget – before the pandemic even started – but this was clearly not enough and the warnings have not been heeded. So, why are western societies almost universally closing branches and ATMs when the evidence so clearly shows that it is detrimental to the people who can least afford it? The trend is clearly a function of banks’ financial incentives; the closure of ATMs enables banks to save money on staff and maintenance. Indeed, the wider digitalisation of the economy is a boon for banks, which have greater control over its customers’ resources.

The disappearance of ATMs also represents a potential civil liberties issue, as explained by American technology attorney Marta Belcher, who points to the recent protests in Hong Kong. She was struck by the long lines that formed at subway stations, where protesters queued up to pay for their tickets in cash out of a concern that using their subway cards near the scene of the protest would enable the authorities to incriminate them. “They were using cash to maintain their civil liberties,” Belcher explains. The disappearance of ATMs, or even a thinning out of the network, would make it impossible for opponents of authoritarian governments to preserve their anonymity when moving around or making purchases.

However, even in so-called “liberal” societies, one should be leery of giving over too much power to a central authority. Lest we forget, a sovereign state in the euro zone saw its citizens’ deposits frozen as recently as 2013. And without even needing to invoke creeping authoritarianism, the negative interest rates that are increasingly common in western economies mean that depositors are effectively losing money by keep their savings on a bank account anyway, so access to one’s money becomes a moral imperative, and a simple power outage or IT failure – which would already be catastrophic given our reliance on the internet – would effectively reduce us to bartering overnight.

In this context, it becomes even more unethical to prevent people from withdrawing their money. A cashless society puts its citizens in a position of grave dependency – which during times of political and economic unrest is irresponsible – and the removal of ATMs from the high street seems like little more than a way to precipitate this move.

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The cashless society from an ethical point of view

The debate about the move towards a cashless society has been at the center of the scene for several years, now. Various angles have been taken by economists, politicians, banking institutions and sociologists. Beyond the technicalities of the debate, lies the question of freedom, of inter-citizen solidarity and of governmental responsibility. The debate cannot remain in the hands of financial specialists, it is first and foremost an ethical, political and societal issue.

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