Cash is Still King

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.

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. 

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.

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.

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.