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Cash is Still King

Despite what many think, cash would still appear to be king. Since 1986, ATM cash withdrawals have been on a steady increase across the country according to statistics by Link. Demand for cash also appears to be showing no signs of slowing down - there are now more than 69,000 cash machines in the UK, representing a growth of 58% since 2003.  

Cash made up for 52% of all UK payments in 2013 with Link forecasting that we will still spend £251 billion* in cash transactions in the UK by 2023. That equates to nearly £690 million of cash spent each and every day of the year.

Cash clearly still plays an important role in society. It’s convenient, immediate and accepted everywhere but will the role of cash change as the payments space becomes increasingly digitised? Considering recent innovations around digital wallets and cashless payment solutions, consumers now have much more choice when choosing their preferred payment method. However, despite this, cash appears to have buoyed remarkably well with around 7.2 million UK adults still using cash as their chosen payment method for day-to-day purchases. Whilst many use digital payment options where it makes sense, using physical notes still suits the vast majority of everyday transaction types.  

Our reliance on cash as a nation is no doubt one of the driving forces behind the evolution and continued growth of the UK’s ATM network in recent years. But as well as increasing in numbers, ATMs are also becoming so much more than just cash dispensers. Advanced multi-functional devices are allowing customers to complete everyday banking transactions at the same time as withdrawing cash, offering convenient banking as part of an omni-channel experience offered by their bank.

Cash itself is also evolving alongside ATM technology. With the introduction of the resilient £5 polymer note by Clydesdale Bank this year, followed by Bank of England in 2016, cash is clearly being designed for the long term. As the industry prepares to adapt to this change would such an investment really be taking place if cash was no longer relevant? 

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Comments: (5)

Prasenjit Das
Prasenjit Das - Virtusa - Hyderabad, India 09 April, 2015, 18:22Be the first to give this comment the thumbs up 0 likes

1986 is actually too ancient in the evolution of banking chennels .A lot of water has flowed down the Thames as banks have strongly moved to alternative channels.Hence its natural for ATMs to grow.Vis-a-Viv year 2003 , a 58 % increase is quite explainable as M3 money supply in the UK has more than doubled( about 130 %).so now the question is cash a lesser king? Unidimensional statistics can be misleading.

A Finextra member
A Finextra member 10 April, 2015, 06:11Be the first to give this comment the thumbs up 0 likes

Change doesn't happen smoothly or in nice predictable advances.

www.payyourway.org.uk/new-technology/

Most people are saying that given time for things like contactless cards and Apple Pay to acheive their tipping points towards mass adoption, and you will see a steady decline in the use of cash. It is as much a generational thing as it is a reflection of any person's payment preferences. All of these things take time. No one can definitively say when cash will suffer a radical decline in usage for any national economy.  It is simply something that is a reasonable assumption that most people place in the back of their minds and then get on with the rest of their lives.  Most people simply allow time to sort the matter of a decline in the use of cash by the broad mass of the population, without any ongoing fuss about it from them.  The sort of people who will be jumping up and down when cash is on its last legs will be criminals, income tax evaders, drug dealers who make use of the black market, deeply conservative individuals who are not enamoured by change, and an assortment of religious and non-religious oddballs who have an inordinate fear of anything that is not to their liking. 

Ramadas Mv
Ramadas Mv - Enterprise Banking Architects - New Delhi 10 April, 2015, 07:32Be the first to give this comment the thumbs up 0 likes

Despite the fact that various electronic payment methods doing a good job at deplacing it, Cash is the prime mode of payment and is widely accepted payment instrument across the world. However, the recently the cash is being replaced by the electronic payments, particularly the debit card payments and the online payments. Over the last decade the UK total spending has doubled, however the cash usage only increased by 7%. According to the UK Payment council cash is still very popular for low-value transactions; cash accounts for 55% of all UK payment transactions, but the average amount we spend is just £11. As a source of money supply, cash provides full and final settlement of a transaction. The picture below show the major Cash circulation &  Key players in UK. Some countries have recognized the cost of cash and its role in the black economy and have taken active measures to wage war on cash.

Stanley Epstein
Stanley Epstein - Citadel Advantage Group - Modiin 10 April, 2015, 09:05Be the first to give this comment the thumbs up 0 likes

Cash and Card (Debit and Credit) will retain the joint crown for a while to come. Both are universal, entrenched and easy to use. Alternative payment methods all have a major drawback. There are far too many of them (meaning that they differ to one degree or another) and virtually all require an investment by the both parties in technology and training.

Richard Broadbent
Richard Broadbent - Diebold Nixdorf - Bracknell 10 April, 2015, 13:58Be the first to give this comment the thumbs up 0 likes

Thanks for all your comments – it’s great to see we’ve sparked a debate. With electronic payments and contactless options gathering pace, the debate will only intensify. What’s important, however, is that cash will remain a core payment method for quite some time.  Recognising this and supporting customer journeys that involve cash alongside those for digital is a must for financial institutions.

 

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