A consultation on proposals to allow shops to provide cashbacks without a purchase has been announced by the Government.
It said the move is intended to support the millions of people and business who rely on cash day to day.
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 announced at the March 2020 Budget 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 its approach to this legislation from consumer organisations, businesses, financial institutions, providers of ATM and payment services and others through a call for evidence.
Last year, consumers received £3.8bn of cashback when paying for items at a till – making it the second most used method for withdrawing cash in the UK behind ATMs.
But 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 2020.
The Association of Convenience Stores (ACS) welcomed the call for evidence.
The 2020 ACS Local Shop Report show that more than two thirds of convenience stores (68%) already offer cashback to customers, with around half (49%) providing a free to use cash machine.
ACS chief executive James Lowman said: “We welcome the Government’s focus on securing access to cash for the long term, as cash remains an essential and widely used method of payment for millions of people.
“Providing cashback without a purchase might work for some retailers, but may not be viable for everyone and cannot be seen as a replacement for the UK’s ATM network. We are watching with interest trials of new approaches to offering cashback.”