Monday, February 26, 2024

Reserve Bank to trial rural cash solutions

Neal Wallace
Innovative solutions sought for lack of banking in remote areas.
Reading Time: 2 minutes

A trial proposed for several rural communities next year seeks to find solutions to the lack of banking and ATM facilities.

The trial to be run by the Reserve Bank of NZ (RBNZ) will test new ways for people, including retailers, to withdraw and deposit cash and takings as over-the-counter banking facilities continue to retreat from rural areas.

For the 18-month trial, the bank is looking for two to three districts with populations of less than 10,000 and which have lost most or all bank-provided counter or cash services.

The RBNZ’s director of money and cash, Ian Woolford, said the trial hopes to establish a system to support cash use and a cash system in rural areas.

“We’ll work with these communities to confirm their cash servicing needs and what possible solutions to trial.”

The RBNZ has previously spoken of systems where people can withdraw cash from merchants without making a purchase for which the merchant will be remunerated.

Other options mentioned include smart ATMs, which can dispense different denominations including coins for retailers, along with secure cash drop facilities.

Woolford said electronic payments generally add to retailer and customer costs, but banks’ phasing out of suitable local cash services makes it harder and more costly for retailers and customers to use cash.

“We want the cash system to remain resilient, and retailers and individuals to continue to enjoy its social and economic benefits.”

In 2017 virtually everyone was using cash to pay for everyday items. By 2021 that figure had fallen to two-thirds.

About 6% of the population rely solely on cash to live their lives, and they tend to be among vulnerable groups – the young, elderly or disabled.

People who rely on cash are also more likely to live rurally or be Māori.

Woolford said most people want the option of paying in cash and use it occasionally, but it is also a back-up option when power and data essential to digital payments are down, as was seen during Cyclone Gabrielle.

The percentage of people with stored cash increased from 37% in 2017 to 46% in 2021.

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