Plans by TfL to stop accepting cash payments at its ticket offices and machines could make it very difficult for cash-only buyers to buy tickets.
During the current pandemic situation, many of London’s Underground station ticket machines stopped taking cash payments for Oyster top-ups or to buy paper tickets.
TfL now plans to make that change permanent, and expand it to more stations.
TfL’s perspective being that cash is now rarely used to pay for travel, and that it will still provide ticket purchasing options at nearby shops, although London TravelWatch has found a number of examples where the nearest retail shop selling tickets wasn’t that convenient.
London TravelWatch estimates that there are 260,000 Londoners without a bank account – and hence without a bank card to pay for travel services. An FCA Financial Lives Survey also found that they adults more likely to be unbanked include 18-24 year olds and the unemployed, which explains the fairly high number in London of unbanked people compared to the rest of the UK.
It would look as if a large percentage of Londoners are unable to open a bank account, and would struggle to use London’s buses and trains if cash was abolished. A bad thing.
However, the Payment Accounts Regulations 2015 requires the nine largest current account providers in the UK to offer free basic bank accounts to anyone who are either unbanked or who are ineligible for a standard current account. The bank cannot refuse a valid request to open an account.
Apart from then having easier access to London’s transport network, unbanked people often pay a financial penalty for paying for services in cash — reportedly as much as £485 per year.
An argument can be made, that while London TravelWatch has identified a problem — people without a bank account won’t be able to easily buy travel tickets — it has proposed the wrong solution in requiring TfL to keep accepting payment by cash.
An alternative where TfL, the GLA and local councils fix the source problem of why people haven’t taken up the option for a free basic bank account would help reduce poverty by removing the cash penalty from unbanked transactions, while also making access to public transport easier.
As an aside, unbanked is not the same as underbanked, which relates to a wider issue of access to loans and other financial services. Many people with basic bank accounts are classed as underbanked and may turn to loan sharks and the like.
However, everyone is entitled, by law, to open a basic bank account, and shouldn’t — in theory — be affected by card-only payment options at train stations and bus stops.
What’s really needed is an education and awareness campaign to fix the unbanked problem at the source. For those utterly unable to switch to bank cards to pay for travel, a waiver of the £5 deposit on Oyster cards and lowering the minimum top-up amount would help.