New covenant lays down agreements on proper functioning of cash
Published: 07 April 2022
Twenty-three organisations closely involved in the Dutch payment system signed a new Cash Covenant this week. The aim of the agreements is to ensure that cash continues to function properly as a means of payment at points of sale in the face of a steady increase in electronic payments.
The covenant was signed by the major banks, the Dutch Payments Association, representatives of consumers, retailers, the hospitality industry and petrol stations, as well as by providers of cash services and De Nederlandsche Bank (DNB). The Minister of Finance presented it to the House of Representatives today. The agreements will in principle be in place for a period of five years.
No fee increases until mid-2023
The covenant sets out agreements among the parties to safeguard the permanent availability and accessibility of cash. They cover various topics related to cash, such as the number of ATMs, fallback options for electronic payments, an inclusive payment system, and anti-money laundering measures. Banks have agreed to keep fees for cash services unchanged until mid-2023.
Cash is under pressure
The new agreements were reached amid the declining use of cash at points of sale in the Netherlands and a cash infrastructure that is under pressure. For example, bank branches provide increasingly fewer cash services, the number of ATMs is declining, and retailers’ unit costs of cash transactions are rising.
Safeguarding the public interest
If cash were to disappear, problems could occur in the event of disruptions in electronic payments, since cash functions as a fall-back option in such cases. In addition, it could be problematic for those who depend on cash as their main means of payment. Moreover, cash is a public good, and it is in the public interest that everyone in society is able to use it without any problems and maintain good access to it. To ensure this, DNB took the initiative in the summer of 2021 to reach new agreements on this issue (see DNB press release).
Research on funding and market organisation
Besides laying down specific agreements for the next five years, the covenant also marks the start of a new study that should explore how the public interest in cash is best safeguarded in the longer term. With the use of cash in steady decline, questions about the funding and market organisation of cash arise. The study will identify various options and should be completed within ten months of the covenant’s signing. The Minister of Finance can subsequently advise the House of Representatives, after which decision-making can take place.