Starling Bank Introduces Fee for Customers Depositing Cash via the Post Office

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December 2021
Starling Bank Introduces Fee for Customers Depositing Cash via the Post Office (1)

Starling Bank Introduces Fee for Customers Depositing Cash via the Post Office

Customers of digital bank Starling who want to deposit regularly cash over Post Office counters will face a fee for doing so from March, the startup announced.

Starling Bank doesn’t have any physical locations. Instead, customers who wish to deposit cash into their current accounts can do so at 11,500 Post Office locations. Currently, deposits are free of charge, with a maximum of £5,000 per calendar year and £5,000 in a single deposit permitted.

Currently, those deposits are free of charge. But from 1 March 2022, Starling account holders will face fees if they deposit more than £1,000 into their account per calendar year. Deposits exceeding this threshold will incur a fee of 0.7% of the deposit.

Starling says that this fee will reflect the “true cost” of offering the service through the Post Office. But it says that only a small number of their 2.5 million UK customers will be impacted because most use online banking exclusively.

Customers can still deposit money electronically and via cheque without incurring fees.

The change reflects statements made by Starling founder Anne Boden in the spring. She told the FT’s Money Clinic podcast that she anticipates cash will disappear—potentially as early as 2030 but more likely “by 2033 or 2034.”

But despite forecasts of cash’s demise, it remains crucial to many Brits’ everyday lives. Research by the Financial Conduct Authority (FCA) found that in 2020, 10% of adults relied on cash for all or most of their daily purchases, including disproportionate numbers of adults who are digitally excluded, over 65, or on low incomes. Their access to cash has been threatened by the closure of bank branches and free-to-use ATMs.

But many of those customers have simply shifted to using the Post Office for everyday banking rather than ditching coins and notes. The Post Office handled its highest amount of cash ever last month: over £3 billion was deposited and withdrawn by personal and business customers over its counters.

To provide Brits with more places to access cash, the government in the spring passed legislation to allow consumers to access cashback from retailers without making purchases. The scheme is being rolled out to 2,000 shops by the end of the year.

However, cash-dependent people are unlikely to be customers of app-based bank Starling. In 2019, the average age of personal account customers with the bank was 35. 

In fact, many of Starling’s users are likely among the 7.4 million people in the UK who are leading almost cashless lives.

Meanwhile, already a raging success in the current account market, Starling is diversifying into more complex—and lucrative—financial products, including mortgage lending.