Are we losing the war on cash?

Of course if we were being cynical we could assume that the increase in cash would be as a result of economic conditions stimulating an increase in undisclosed cash-in-hand income from person-to-person payments.

I agree that "economic conditions" may be an influencing factor. Perhaps not so much due to "undisclosed cash-in-hand income" (though that may be part of it) and more to do with people simply budgeting.

When you have £50 cash you can't spend more than £50. That's your budget. When you have a card in your hand, be it a credit card or debit card with linked overdraft - you can spend beyond your budget.

Of course people could go with a prepaid card. They are popular to a point, but also tend to have fees and are certainly less well established than cash.

There are plenty of decent prepaid cards out there that are mostly fee free (as long as you are happy transacting with the card rather than taking Cash out at ATM's).  O2 Money and Kalixa both come to mind.

It's not about the medium (carrier of value), it's about "what's in it for me". If I knew I can pay ANYWHERE with my card, why would I need cash? Why don't all merchants accept cards for all the payments? The answer is in the stats - over 80% of cash payments are below £10.00 (where cards are still expensive). Offer merchants a corresponding deal (e.g. https://www.finextra.com/blogs/fullblog.aspx?blogid=7666) and they are in.

You make a valid point. That said, I still think people like to have a fallback. If your card doesn't work or the merchant has a problem with their terminal and cannot take card payments - it's still good to have some cash in your pocket.

Technology may have advanced a long way, but it's still not 100% reliable. Cash always is.

There is no war on cash. At least from the consumer point of view there isn't. Other organisations have an interest in getting rid of cash - either because it costs them money to handle it, or they can get a margin from use of an alternative payment system.
But as a consumer, I resent paying an extra 2% or whatever for using an alternative to cash. As Alexander correctly puts it "what's in it for me"?

I agree that from a consumer perspective they are unaware of any "war". The banking and payments sector, however, wants to replace expensive cash. The problem is, as you rightly highlight, unless there's an advantage to the consumer... and to the merchants to do so - why would they change? If banks and card schemes charge for card and mobile payments and don't charge for cash - why would either consumers and merchants want to embrace this? Purely to have less cash in the till at the end of the day? I don't think so.

People may be prepared to pay a little more for convenience, but in hard economic times that's a harder thing to sell.

Also the "coolness" of waving your mobile or touching your card has already lost its novelty factor. In the end there needs to be a real and tangible benefit beyond avoiding a run to the ATM to withdraw cash.

er.. consumers and businesses "made 20.8 billion cash payments in 2012, compared with 20.6 billion in 2011." That looks static to me.

Maybe we can learn something from others....

Governments Can Save Up to 75% with Electronic Payment Programs

The world leader in mobile money is Kenya, where mobile network operator Safaricom launched M--‐Pesa in 2007. Four and a half years after launch there are approximately 16 million users of mobile money in Kenya, conducting over 2 million transactions every day.