Miscellaneous Payment services and the provision of cash
In recent years, the ongoing trend in payments in the UK has been away from cash (i.e. banknotes and coins) and towards card payments and other digital payment methods. However, cash remains important to the daily lives of millions of people across the United Kingdom, with UK Finance reporting that 23% of all payments were carried out using cash as of 2019.
	At the March 2020 Budget, the Government announced that it will bring forward legislation to protect access to cash and ensure that the UK’s cash infrastructure is sustainable in the longer term.
	To progress this work, the Government published the Access to Cash: Call for Evidence on 15 October 2020 seeking views on the key considerations associated with cash access, including deposit and withdrawal facilities, cash acceptance, and regulatory oversight of the cash system.
	As part of this Call for Evidence, the Government invited views on the potential for cashback to play a greater role in providing cash and how this can be facilitated. It noted that cashback, where a purchase was made using a debit card, was the second most frequently used method for withdrawing cash in the UK behind ATMs in 2019. There were 123 million cashback transactions amounting to a total value of £3.8 billion. It also noted that cashback without a purchase has the potential to be a valuable facility to cash users in future and play an important role in the UK’s cash infrastructure.
	The provision of cash, where it is provided alongside the purchase of goods or services ("cashback with a purchase"), is exempted from the definition of a payment service for the purposes of the Payment Services Regulations 2017 (PSRs). As a result, the person providing the cash alongside a purchase of goods or services, for example a shop, does not need to be authorised by or registered with the FCA in order to provide this service.
	The Act amends the PSRs, so that, in certain circumstances, the provision of cash where there is no corresponding purchase of goods and services, is also exempted from the definition of a payment service. This will mean that "cashback without a purchase" can be offered on the same basis as cashback with a purchase. Before the Act, relevant persons had to be authorised by, or be registered with, the FCA, or act as an agent of a payment service provider to do so. This was a significant barrier to widespread provision of purchase-free cashback.
	The change therefore allows for the widespread offering of cashback without a purchase by shops and other businesses; meanwhile the Government is continuing to progress legislation for access to cash more broadly.
	Where the service is offered, a local business, such as a corner shop, café or pub, will be able to provide cash to a customer without them having to make an accompanying purchase.