The Post Office handled a record nearly £3.5billion in cash for customers in August amid bank branch closures and a cost of living crisis.
The £3.45billion in cash passing through post office counters in August was the highest total since it began recording the volumes it handles through its 11,500 local branches five years ago. August is traditionally a quieter month for cash transactions at its branches.
“La Poste attributes the continued high levels of cash withdrawals to the ongoing closure of local bank branches as people turn to La Poste for their cash needs,” the company said. “As the cost of living begins to weigh in, people are also increasingly turning to cash to manage their budget week by week and often day by day.”
La Poste expected September to be another record month for cash withdrawals and deposits. However, the Queen’s State Funeral Bank Holiday, which saw most branches closed, resulted in a £3.35billion drop recorded.
The Post Office expects the trend of managing higher levels of cash to continue during the cost of living crisis, as many people find it easier to manage budgets and monitor expenses using banknotes and coins rather than conducting electronic transactions.
“We expect cash transactions to continue to exceed expectations in October and for the rest of the year,” said the Post’s chief banking officer, Martin Kearsley. Cash transactions include personal deposits and withdrawals to Swiss Post accounts, as well as for business use.
The company said personal cash withdrawals at its branches totaled £805m in August, up 0.5% from July, while personal cash deposits topped £1.4bn sterling for the first time.
Since January, more than 430 additional bank branch closures have been announced across the UK, according to Link.
La Poste is running pilot banking centers – 25 locations have been identified so far – which will help communities whose access to cash has been restricted due to bank branch closures.
“We are increasingly seen as the only place on the main street where day-to-day banking can be done,” Kearsley said.
However, in the long term, the use of cash to make payments is expected to become increasingly rare. UK Finance, which represents the banking industry, says that by 2031 cash will account for just 6% of all payments.
The use of banknotes and coins has dropped dramatically over the past decade, from 55% of payments in 2011 to 15% last year.