The amount of money withdrawn over the Post Office counter last month was the highest it had been in all of 2020, but cash usage continues to lag pre-coronavirus levels.

Around £641million was withdrawn by individuals in December, the most since £634million was withdrawn in March, while personal and business withdrawals totalled £664million, data from 11,500 Post Office branches shows.

Many now rely on the network for their money, with bank and building society branch closures in villages and towns across the country, along with dwindling numbers of cash machines making it the only viable option.

But despite bouncing back after the November lockdown withdrawal figures remained lower than those seen in the same month in 2019, with the amount taken out down 9 per cent. 

The £664m withdrawn over the counter from 11,500 Post Office branches in December was a 2020 high

The £664m withdrawn over the counter from 11,500 Post Office branches in December was a 2020 high

The £664m withdrawn over the counter from 11,500 Post Office branches in December was a 2020 high

Small businesses may also choose to pay in takings over the counter if their bank allows and there is no longer a branch close-by and the data contained worrying signs. 

Some £788million was paid in over the counter by businesses last December, down 27.4 per cent on the nearly £1.1billion deposited in the same month in 2019, a time the Post Office said was usually the busiest month of the year in the run-up to Christmas.

Although higher than the just £320million paid in in April during the height of the first lockdown, the slump suggests restrictions introduced over the Christmas period to slow the spread of the coronavirus, coupled with falling spending and a preference for online shopping all served to hit high street footfall and in-person spending, with Christmas markets across the country cancelled.

In-store retail spending in December fell 8.3 per cent compared to the same month in 2019, according to figures from Barclaycard, while overall non-essential spending fell 4.9 per cent, the largest fall since June.

Business deposits were dramatically lower than the same month in 2019

Business deposits were dramatically lower than the same month in 2019

Business deposits were dramatically lower than the same month in 2019

The Federation of Small Businesses warned on Monday a quarter of a million small businesses could fold in 2021, with confidence among firms at the second-lowest level ever recorded.

Its chairman Mike Cherry told This is Money: ‘Shops are seeing in-person transactions fall exponentially as ecommerce becomes the favoured option – and indeed only one for discretionary spending in a lockdown. 

‘That isn’t necessarily an issue in and of itself. Those selling consumer goods have long since realised that a marriage of bricks and clicks – a strong physical presence complemented by an online one – is the way forward.

‘But firms need the right support to make that combination possible. At the moment, they’re not getting it. The cash grants available to small shops are way short of where they were last Spring, and our broadband infrastructure is derisory compared to other comparable economies.’  

Slimmer takings and reduced trading were reflected in how the amount of cash paid in each month by businesses did not top £1billion in a single month in the whole of 2020. 

Since the pandemic struck the UK, the highest amount deposited was £965million in September, a figure which was still 8 per cent down on the year before.

Coronavirus restrictions continued to hit the amount of cash being deposited at branches

Coronavirus restrictions continued to hit the amount of cash being deposited at branches

Coronavirus restrictions continued to hit the amount of cash being deposited at branches

September was the only month last year when the amount of money paid in over the counter by both business and personal customers topped £2billion, a figure which Post Office director of banking Martin Kearsley had previously called ‘encouraging’.

Some £19.6billion was deposited in 2020 and £7billion withdrawn, the Post Office said.

And while withdrawals rose 14 per cent between November and December as the country’s second coronavirus lockdown came to an end, cash usage has declined as a result of the pandemic, as consumers opt for contactless payment methods.

How much was withdrawn over the counter from the Post Office in 2020?
Month  Amount withdrawn by personal customers
January £611m
February  £618m 
March  £634m 
April  £369m 
May  £449m 
June  £514m 
July  £582m 
August  £552m 
September  £591m 
October  £589m 
November  £562m 
December  £641m 
Source: Post Office Cash Tracker 

A survey of 2,000 adults by the fintech news website AltFi late last year found almost two in five used cash less as a result of the coronavirus, with older age groups who were previously more likely to use cash giving it up in the face of the pandemic.

John Howells, the chief executive of LINK, which runs Britain’s cash machine network, said: ‘It’s clear the coronavirus has changed the way people pay for things with a significant shift towards digital and contactless payments.

‘Year-on-year, there’s been a decline in ATM visits by 37 per cent in 2020. That’s understandable when much of the economy and traditional locations where cash is used are closed.’ 

Some £81billion was withdrawn from cash machines in 2020, down from £116billion the year before, while there were 1.64billion visits to ATMs last year.

‘However, whilst cash is no longer be the most popular payment method, people are still withdrawing more than £1.6billion each week and around three quarters of consumers visit an ATM every fortnight’, Mr Howells added. 

The Post Office began releasing cash deposit and withdrawal figures at its 11,500 branches in July.

Increasingly relied upon by businesses as ‘the last bank branch in town’, the Post Office is due to play a key role in pilots run in nine areas across Britain designed to protect access to physical cash, including running three shared bank branches in Bedfordshire, Essex and Scotland.

How much was paid in by businesses in 2020? 
Month  Amount deposited by business customers 
January £993m
February  £901m 
March  £837m 
April  £320m 
May  £353m 
June  £502m 
July  £817m 
August  £830m 
September  £965m 
October  £924m 
November  £719m 
December  £788m 
Source: Post Office Cash Tracker 

‘With more people living and working at home, 2020 was the year that many discovered they could deposit and withdraw cash at the counter of their local Post Office’, Mr Kearsley added.

‘Despite the introduction of lockdowns, Post Offices remain open and our branch network has provided a lifeline to small businesses in particular that have needed somewhere open long hours to deposit their cash takings.’

Mr Cherry said: ‘The rapid move to contactless was there before last spring, and is now more prevalent amid widespread agreement that it is the safest way to pay in a pandemic.

‘All the actors in this space – government, the Bank of England, regulators, cash point providers and commercial banks – need to be exceptionally careful where access to physical currency is concerned. 

‘Hurtling towards a cashless society that we’re not ready for yet will hurt independent high street businesses – four in 10 of which say cash is still the top payment method among their customers – and society’s most vulnerable, who disproportionately rely on notes on coins.’

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