Why are banks using the new ‘cashless’ rules?
BANKING is using a new ‘zero-fee’ system to encourage bank customers to take out overdrafts on debit cards instead of cash.
It is part of the government’s drive to make sure consumers get value for their money, rather than making more of it.
The Bank of Canada says it will use the new cashless system in six new areas: small businesses, small and medium-sized enterprises, commercial banks, and consumer financial institutions.
In most cases, the bank will use debit cards for the purchase of items such as groceries, gas and other products.
The bank will also offer its customers a “bundling” feature for purchases that are less than $10,000.
The banks are also expected to offer a “pay with your card” feature.
Cashless banking is not new.
In November 2014, the Bank of England, the country’s central bank, announced it was changing the way it calculates interest rates.
Under the old system, banks charged the rate for each transaction based on how much money they were receiving in cash.
That meant a small business that paid $1,000 in bills would have to pay $2,500 in interest on the same amount.
In response, the UK Bankers Association, which represents more than 100 major UK banks, launched the Cashless Banking Campaign to encourage people to use credit cards instead.
The Campaign was funded by a donation of $15 million from the Canadian government.
It was launched in October 2017 and was followed by a similar campaign in Canada in September 2018.
“Our approach is to create an environment where people feel empowered and they are able to make decisions for themselves and their families, rather then relying on the bank for everything,” said Chris Barrington, a senior vice-president with the Bank’s Canadian operations.
The new Cashless Bank Credit Card Offer, which is available to new customers in the US, will be available to all existing customers.
The first six new cards will be introduced by March, 2019.
The campaign has been applauded by critics who say it will lead to higher costs for customers, especially in rural areas.
The Royal Bank of Scotland says it plans to implement the Cashier Cash Card by July 2019, though the company hasn’t provided a timeline.
In October 2018, a British government study found that a cashless society would save £2 billion per year.
With files from The Canadian Press