UK becomes 'cash-second' nation as contactless payments soar

On 5th January 2016 Finextra published an article - "Appetite for cash remains strong as ATM usage soars". Within the article it also said that with the exception of North America, the number of withdrawals increased throughout the world. So who is right? I suspect that each party is selecting the statistics that suit their needs. Anyone read Daryl Huff - How to lie with statistics?

In response to your comment Melvin, the article on ATM usage remaining strong made it quite clear that the increase in usage was being driven by developing markets while "in more mature markets, however, ATM usage levels are stagnating or even declining".
I don't think there is a contradiction here. 

You left off the second half of the sentence from the 5th January article - 'but all regions, except North America, saw growth in the total volume of withdrawals.'

Visa (a company for whom I have the greatest respect) would be better advised to cut the hyperbole and serve up straight stats before they compromise their credibility.

LINK data show clearly that cash withdrawals continue a steady 2% rise, month in, month out, in the UK. 

"Anyone read Daryl Huff - How to lie with statistics?" Indeed yes! Based on which I wrote:

How To Lie With Big Data

https://www.finextra.com/blogs/fullblog.aspx?blogid=12134

All of this toing & froing is for naught. Eventually cash will be sidelined or minimised by contactless payments. If you cannot see it coming as a trend, no one can probably help you to acknowledge the inevitable slide in cash payments together with the inevitable rise in contactless and mobile payments. As I & a few others have said multiple times on ‘Finextra’ in relation to Australia’s explosive rise in use of contactless payments; according to the Reserve Bank of Australia (RBA) contactless payments are slowly displacing cash for the use of small payment amounts, and this is a confident and redoubtable trend that you could possibly find anywhere.   

Simply read the annual report of the ‘Payment Systems Board’ (PSB) of the RBA, for the just concluded year of 2015. On page 15, under the heading of ‘Retail Payments Developments’ we have the following paragraph.  

‘The number and value of ATM cash withdrawals (the main method individuals use to obtain cash) fell by 5 per cent and 2 per cent respectively in 2014/15, continuing the trend of recent years (Graph 1). The continued decline in ATM withdrawals is likely to reflect a number of factors, including consumers’ adoption of new technologies such as contactless card payments that, like cash, provide for relatively quick transaction times. Growth in online commerce is most likely also a factor, with everyday transactions increasingly occurring online rather than in person. Recent trends in withdrawals are consistent with previous snapshots of consumers’ use of cash for individual payments, with the results of a 2013 Bank survey showing that the relative use of cash for consumer payments had declined noticeably since earlier studies in 2007 and 2010.’

To continue with my emphasis,

‘Nevertheless, cash remains an extensively used payment method, especially for low-value transactions.’

http://www.rba.gov.au/publications/annual-reports/psb/2015/pdf/2015-psb-annual-report.pdf (Accessed on the 27th January 2016)

The above quotation is from the Payments Systems Board Annual Report for 2015, the ‘PSB’ operates under the auspice of the RBA.    

 According to the PSB cash will still have a very strong and continued life to come and no one is saying that cash is going to disappear tomorrow, on such and such a date. Clearly it is not going to do that anymore than gravity will suddenly discontinue tomorrow. Cash is still an extremely useful commodity that has a very long life ahead of it. It is just that if I were to look through my Chrystal ball, that ‘life’ of economic use will eventual come to a finite halt, as all living organisms eventually do. This is what the PSB is saying to anyone in Australia with a rudimentary sociological imagination.

I know several stores offering a discount of 10% for cash payment and only 8% for credit card payment. I love credit cards. But, given the disincentive from merchants for using them, I always think twice about not using cash. I hope merchants read all these nice reports about hidden cost of cash and advantages of using credit card so that I can forever use credit cards without suffering any cost disadvantage.

There are always people who think that their time has no value. 

The debate should not be about if Electronic payments will displace cash - but what is going to be the pace of change and who will win market share.  Apple/Samsung or Banks/Cards/Schemes - currently my money is on cards, but believe that slowly Mobile will displace cards.  All the time the 500 Euro note exists - there will be Avid cash users out there... not always nice people though.

Oh yes, I forgot about the time advantage. An average credit card transaction takes 30-60 seconds depending upon network traffic and sometimes requires more than one attempt if one of the various moving parts in the process is down. On the other hand, an average cash transaction takes 10-20 seconds and doesn't have any dependence on external factors. So, higher discount, zero surcharge, time savings - these are at least three advantages of cash. Nevertheless, I love credit cards, so I'd like merchants to read up all about hidden cost of cash, forego the immediacy of cash payments and throttle the speed of cash payments so that I can use credit cards without suffering any cost or time disadvantages.

Apple/Samsung use Banks/Cards/Schemes. Virtually every form of mobile payment uses bank-issued cards. If Apple/Samsung/mobile win, automatically the undergirding Banks/Cards/Schemes win. But the reverse is not true. So this is an unevenly-positioned debate.

In the long run, we’re all dead anyway. Apart from that, fintech alternatives to cash are currently fueled by VC funding. If they don’t show enough traction, they’ll see their funding cut off. So pace of change is an important element of the debate.

In the light of the following recent findings, there's no guarantee that any one payment method will continuously fall and another, continuously rise, going forward.

1. Nearly half of US Millennials said they're more likely to pay by cash now than a few years ago (https://t.co/pAISFNRJ1O)
2. An overwhelming majority of Indian Millennials said that they prefer cash as their wedding gift instead of gift cards (http://timesofindia.indiatimes.com/life-style/relationships/man-woman/Wedding-gift-dilemma-Just-give-cash-say-young-couples/articleshow/50685204.cms)

To me another really interesting debate is whether regulation will play a far more important role than Apple/Samsung/Mobile in driving the mix of payment methods in future.

An increasing number of citizens do not carry cash at all. That is one more reason why we need easy mobile and x-banks real time payments - like the Siirto launched today in Finland.