Banks should resume handling cash in small communities – proposal

2026-02-23 - 21:46

Analysis: In the small central Hawke’s Bay community of Waipawa, many of Josh Renall’s customers at the Goat Horn Café still pay cash for the eatery’s popular eggs benedict, or for their morning coffees on the way to work. The 25-year-old says some prefer it that way; others including some elderly or people with disabilities find new digital payments technology difficult. Nationwide, cash payments have fallen from about 32 percent in 2007 to less than 5 percent now, but that decline is not evenly distributed. There are communities (and industries, licit and illicit) that still rely more heavily on cash. Renall’s been one of the local business owners and charity operators who are piloting a new 24/7 automatic cash machine at the Waipukurau library, 10 minutes down state highway 2. It allows them to swap cash for bigger or smaller denominations, to withdraw cash, and soon it should enable them to deposit the day’s takings direct into their bank accounts. This isn’t operated by one of the big high street retail banks. The unbranded black-and-white ATM is run by the Reserve Bank – the first in a Community Cash Trial being rolled out across the country. Tomorrow, the Reserve Bank will step things up. It is to open public consultation on a proposal that banks must provide minimum cash services so people, businesses and community groups can withdraw cash, deposit cash and get change free-of-charge, close to where they live. “Most businesses down this way have to drive up to Hastings for their closest bank, such as Westpac and TSB, and that’s 35 to 40 minutes if there are no delays. Mostly, there are roadworks,” Renall says. “And then they have to come back again – and that’s during their busiest working days.” Central Hawke’s Bay District Council chief executive Doug Tate welcomes the Reserve Bank’s initiative to ensure people can still use cash in small communities. “We heard from local businesses about the impacts of the day-to-day challenges of simply doing business with the lack of banking services and access to cash facilities in the district. “Uptake from businesses across the community using the machine has been strong with over 80 businesses and groups participating. This trial is a great example of the innovative and smart approach we are taking to address community and business pain points – ultimately saving time and money and keeping services local.” Central Hawke’s Bay locals queue up. to use Waipukurau’s new cash machine, provided by the Reserve Bank. Photo: Supplied This has been part of a contentious programme initiated by the Reserve Bank, which says local bank branches had closed and the remaining ATMs were inadequate. The Reserve Bank has designated itself the steward and kaitiaki of the cash system to preserve the benefits of cash for all who need it. Critics say this, alongside programmes like mitigating climate change through monetary policy, is a distraction from its core business of managing inflation. But it’s certainly true that cash-handling is becoming ever more difficult, both for companies and individuals. There has been an accelerating decline in the numbers of bank branches and ATMs. And even where they do still exist, their functions are trimmed back. I remember, two or three years ago, traipsing across Auckland from bank to bank, kids in tow, as we tried to open their first bank accounts and deposit the cash their grandparents and aunties had given them for their birthdays. Bank after bank disclosed they were ‘cash-free branches’. Surely, if there’s one place one would think would still handle cash, it would be a bank. The public still gets access to cash through bank-owned ATMs, says Cash and Payment News editor John Winchcombe, but 34% of cash is now accessed through merchants. The problem is that the retail cash sector, merchants, independent ATM operators and consumers, are carrying 68% of the costs (and risks) of cash – providing cash, change, running the independent ATMs and the costs of storing and managing cash outside of banks. He says the commercial banks supply the cities but have left the retailer cash sector to do the rest. The Reserve Bank has commissioned surveys on the use of cash, in 2023 and again late last year. They’ve showed that 72 percent of small businesses say they would be adversely affected if cash wasn’t available as a means of payment. More than 80 percent of adults still sometimes use cash. More than half (56 percent) store cash, and 8 percent rely on cash. “People should be able to use cash as and when they want to but they can’t if cash services aren’t available,” said Ian Woolford, the Reserve Bank’s director of money and cash, in November. “Our view is that it is getting too hard for people to withdraw and use cash, deposit cash or make change, as bank branches have closed especially in rural areas. Addressing this is not an easy task but it’s one we’re committed to.” According to Woolford, the public expect banks to provide cash services to them. To expand cash services across New Zealand, one option was encouraging banks to voluntarily commit to providing their customers with good access to full cash services to a minimum standard. But if banks weren’t willing to commit voluntarily, the Reserve Bank might need to use its existing powers to obtain the right outcomes, he said. Retail banks are awaiting details of the consultation with a degree of caution. It seems apparent they would rather focus on investing in improving new technologies, like open banking, than invest in preserving old technologies like cash. ANZ and Westpac say they’ll work with the Reserve Bank on its consultation. Westpac senior media relations adviser Melanie McKay says the bank recognises the importance of a robust cash system for the benefit of all NZers, and the need for the Reserve Bank and industry collaboration to achieve this in a resilient and sustainable way. BNZ and Kiwibank are more upbeat about preserving cash. Suzanne Gudgeon, BNZ head of cash, acknowledges the important role cash plays in communities, and says BNZ has been working with the Reserve Bank and other industry participants to help shape its future. “We recognise the decline in personal cash usage and the need for solutions that address this trend and the challenges of ensuring safe cash movement,” she says. Logan Munro, Kiwibank’s general manager for retail distribution, says that bank operates the country’s largest physical banking footprint: 53 branches and 83 Local for Kiwibank sites nationwide, along with 15 regional business banking hubs. “We understand the essential role cash plays for many customers and businesses especially in rural and regional areas,” he says. “We support efforts that help maintain reliable access to cash and would constructively engage on any future proposals.”