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@Jim - you are an outlier. Not representative.

For every Jim Wells there are 20-30 Millennials who never use cash. In respect to the FRB data, the real trick is to look at data from EFMA, UK Payments Council and others that show small transactions are stable for cash, but the value of those payments is rapidly declining. So on a total value of cash payments in retail, it's rapidly changing. That's the behavior that matters, whether it is used of everyday things, or just micropayments 

@Jim - actually no, there's no difference at all.

Let's take Australia.

Since 2007 cash use has been in decline, directly correlating with take up of digital payment methods.

Just in the last year alone, cash withdrawals from ATMs decreased by almost 5 million instances (out of 60 million) per month. The value of those withdrawals also decreased by 9% or $10.8 Billion. Cash usage is expected to decline a further 43% by 2018.

Sweden has announced it's intention to be the first cash free nation just this month - http://www.businessinsider.com/sweden-goes-cash-free-2014-10

While in Italy cash still accounts for 2/3rds of payments, today cash use is the outlier, not electronic payments.

I'm afraid your assertion that digital payments increase doesn't equate to the death of cash is not a view supported by the data, unless you are in outlying economies at this stage.

We will see the death of cash, the same way we've seen the death of passbooks, newspapers, video rental stores, and other such outmoded behavior. The predicted death of cash does not have to see every single bank note disappear to be effectively called - it just has to stop being used by the vast majority of the population. That is likely less than a decade away for most developed economies. While cash will remain for sometime after that, it certainly won't be a dominant form of payment out past 2030.

@MattW/@Ketharaman - there's always a first for everything

There are only two developed economies in the world where cash use is increasing namely Japan and Germany, in every other developed economy cash use is rapidly declining.

The article was obviously 'link bait' I'll admit that - but it also is a completely scientific valid observation. Is it going to result in the death of cash, no - behavior will do that on its own.

There are already 9 countries in Africa where mobile payments usage exceeds cash usage. This is not about a resource available to poorer customers at the lower end of the market - that is 1960s thinking. We are in a new age, with new technologies for payments. Obsolete is just obsolete, although cash will have an extraordinary long tail.

Thanks for the feedback

 

Love it!! Was waiting for the pro-cash guys to chime in... and they didn't let me down

BK

Mosh,

Thanks for the feedback. I don't have data on electronic payments or mobile wallet adoption for Nigeria in the light of Ebola, so if you have access to any I'd definitely be keen on seeing it.

BK

No one except Katharaman is surprised...

Ulrich - fair point although I can use my NFC chip in my phone even when the phone is out of battery. I don't know if the iPhone 6 allows that. 

Having said that - how often really does your phone run out of battery these days? Almost never 

@Ketharaman,

I suggest you read this most excellent piece on Bank Innovation today which details the way Apple operates with Mastercard. It will give you some clarity on the security/technology aspect
http://bankinnovation.net/2014/09/heres-how-the-security-behind-apple-pay-will-really-work/

In terms of the signing of the changeslip, the issue is one of identity and fraud management - which is specifically why the US has such poor card fraud rates (i.e. they still use signature). While providing 'proof' as you say, the same information is displayed on Apple Pay in real-time, and is non corruptable (compared with paper). This is definitely a generational shift. You should read Mastercard research on the lack of interest GenY show in paper receipts - it is telling.  

In terms of discrepencies, this is a system that has been in place for 30 years. Since the introduction of electronic POS there has been no known corruption of receipt at a terminal. The only issue is mischarges which could as easily be resolved with a electronic receipt as a paper receipt. On the program management side I can assure you that for Moven's business we have never had to reference a paper receipt in a dispute situation. 

What we know is that Apple was willing to take the risk on identity knowing that they'll have better success than signature, and in return will get 20 basis points rebate per transaction from the banks as a result. It appears all concerned believe that mobile payments are more secure, and more efficient than plastic.   

In the US there is no accepted consensus on PIN yet (in fact signature interchange is a third of PIN Tx), which is why Apple negotiated the use of iTouch/SE/Tokens versus PIN. However, they also agreed to accept some level of risk with that, and in return they got a new interchange rate equivalent of 'cardholder present' rate instead of CNP/CP 

Martin,

What is an indictment on the industry is that it took a Google and Apple to fix the in-phone payment capability, and the target breach to fix the EMV problem in the US. Nothing about this was lead by banks or card networks, with the exception of approving the tokenization approach that Google pioneered.

BK