Shops will offer cashback without consumers needing to make a purchase, under Treasury proposals to protect people’s access to cash.
In 2019 consumers received £3.8bn in cash when paying for items at a till, making it the second most popular way of withdrawing money behind ATMs.
The Treasury said EU regulations made it difficult for retailers to offer cashback when people were not paying for goods or services, and this had been a barrier to a wider rollout.
It said the government was considering changing the rules after the Brexit transition period ends on 31 December, freeing up more businesses to offer cash.
The coronavirus crisis has accelerated UK consumers’ move towards card payments and away from notes and coins, and the contactless card payment limit has been increased to £45.
Some hospitality businesses have stopped taking cash entirely while others have removed minimum spends on plastic. At the same time, banks have continued to announce branch closures, leaving fewer options for people who want to handle cash.
In September, £6.9bn was withdrawn from ATMs run by the Link network, compared with £9.3bn a year earlier and £10.3bn in September 2018.
Charities have said the move away from cash is a problem for vulnerable people, and in the summer a taskforce launched community access to cash pilots to experiment with different ways to keep cash in circulation.
The Treasury said it wanted to ensure no one was left behind in the move to digital payments.
John Glen, the 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’s proposals, which are open to a six-week consultation, also include making the Financial Conduct Authority, the City watchdog, responsible for overseeing the cash system, rather than the current combination of organisations including the Treasury and Bank of England.
Natalie Ceeney, the chair of the community access to cash pilots, said it was essential that the government and other groups committed to keeping cash viable.
“This is increasingly urgent,” she said. “Last year we warned that the UK was sleepwalking into a cashless society. Covid-19 has placed even greater strains on the whole system.”