The premature death of cash?

By Ron Delnevo, ATMIA Executive Director Europe

Earlier this year figures were published by the Payments Council purporting to show the demise of coins and notes and the rise of the ‘cashless society’. The figures concluded that 48 per cent of payments were made in cash, with the remaining 52 per cent made up of non-cash payments.

A ‘cashless society’ is one where we would forgo all cash and instead use electronic payment systems, like the much-hyped Apple Pay, to buy everything from a pint of milk to a car.

In reality, each time an announcement like this is made, it feels like Groundhog Day. The death of cash has been predicted for almost 60 years and with each prediction there is a new contender to play the part of king-slayer. Whether it is cheques, credit and debit cards, online banking or Apple Pay, none have yet managed to depose cash from its throne.

In fact, the amount of cash in circulation in the US grew 42 per cent between 2007 and 2012, and in the UK the Bank of England has seen a 46 per cent increase in the number of notes in circulation. Despite predictions of cash disappearing, the value of cash transactions has actually remained stable.

Indeed, despite people predicting the end of cash for some time it is clear its use continues to grow. The value of notes in circulation goes up about five per cent every year and there is around £60 billion of notes in existence in Britain. And that is without also factoring in the amount of coins in circulation.

For whatever reason, most media outlets have failed to pick up on this fact, but there are numerous reasons why cash remains popular. According to Reuters, the top reasons cited by US retailers for not adopting Apple Pay are the lack of customer demand, lack of access to data on the take-up by iPhone users and the cost of implementing contactless technology.

On the other side of the equation, consumers are reluctant to give up cash because it allows for greater control of finances and budgets. Cash is also universally accepted and so can be relied upon more than any other form of payment. Nowhere is this clearer than in London. Data released in March showed that five out the top 10 areas for cash machine use were in the capitol (Bow, Brixton, Dagenham, Ealing and East Ham).

Hard cash remains the main payment means of choice, as it has ever been since it was introduced in the 4th century BC. Given it has already lasted this long, it can be confidently predicted that it will take some time before the alternatives become anything other than mere pretenders.

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