Rumours of the demise of cash are greatly exaggerated, according to head of banking services at the Post Office (PO), Ross Borkett.

In an exclusive interview with Better Retailing, the head of cash services at the organisation pointed to signs that the move to card and digital payments under the coronavirus lockdown appears to be reversing as government restrictions ease.

The PO’s newly launched cash tracker, which looks at transactions at its 11,500 branches, revealed a 25% bounceback in July alone across the UK on cash deposits, and 13.2% on withdrawals.

Despite still being down compared with pre-Covid-19 periods, the rise in cash in circulation was welcomed by independent shop owners who complained that ‘rip-off’ card payment fees were damaging margins.

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Discussing increased cash circulation, Borkett said: “Under lockdown, we saw a 50-55% drop in withdrawals and Link’s ATMs saw an even greater decline – lots of its estate is in high-footfall locations such as high streets. It’s linked to recovery. As the lockdown eased, we saw withdrawals increase, and they’re increasing at the same rate for Link, albeit from a lower starting point.”

Despite the progress, Borkett suggested some of the move to card, in part driven by the increased contactless cap, would remain. “I’ll be surprised if we get back to pre-Covid levels. I’m not sure where it’ll finish, but we’re estimating we’ll be back to 85-90% by sometime next year.”

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The director added the PO had been closely monitoring the impact of second regional lockdowns. “In Leicester the data shows a drop in transactions but then it rebounds at the same rate as nationally,” he explained.

As bank branch closures continue alongside cuts in opening hours, and the number of free-to-use ATMs dwindles, Borkett said the PO has both a “growing role” and additional opportunities in protecting access to cash.

He highlighted the recent doubling of the business banking deposit cap in its smallest branches to £4,000 per day, work with the banks to “automate” PO counter cash services and work underway to replace its current free ATM provider Bank of Ireland, which is due to remove its entire PO estate by the end of 2021.

Asked how confident he was that a replacement provider would be found before this point, he responded that the PO was “relatively comfortable”.

However, it’s not just cash access that’s a risk to the PO’s most vulnerable customers. Approximately 700,000 customers receive benefit or pension payments from the DWP through a Post Office Current Account (POCA).

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The DWP is planning to axe the POCA service in less than 15 months, forcing those currently without another account to find other means of receiving payments.

Borkett told Better Retailing: “We don’t know how many of these have other accounts, but there’s certainly a group of vulnerable customers and the DWP are in the process of making a decision on whether to extend the contract. With Covid-19 there will be pressure to do that.”

Asked if these customers were on track to move to other methods by the deadline, he said: “At the current rate of decline at the moment we wouldn’t hit zero. DWP will have an exercise to move them to accounts, there will have to be a migration when it comes to an end,” he said.

Find out more on our coronavirus information hub for retailers