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Cash is dead, long live cash CASH & ATMS
FEATURE NAME
In the buzz of the fintech world, it’s often easy to get swept up in the hype. With as many payment options as there are on your fingers, why would you ever need cash again? As it turns out, cash is very much alive and kicking
Alex Hamilton Senior Reporter
I
n July 2017, the UK experienced a watershed moment, though few people would have realised it. For the first time in history, notes and coins had been toppled from their position
as the UK’s number-one payment method. Card payments now represent more than half of all retail purchases, according to figures from the British Retail Consortium. Contactless cards, which were initially received rather coldly by the British public, now account for a third of card payments, too. Cash is dead, cry the futurists. All hail the contactless future.
Yet across the globe, the world’s second-oldest form of payment is still going strong. Depending on who you ask, the future of payments involves smartphones, biometrics and even cryptocurrency. Those solutions may be the future, but the present-day reality is still grounded in good old-fashioned coinage and cash.
Physical cash in circulation in both the US and Europe is growing. It’s not just the large-value notes increasing in number, either. Small denominations, such as the $1, $5 and $10 bills, are on the rise. Between 2010 and 2016 the value of these notes in circulation rose by $8 billion in the US. According to Federal Reserve data, there are a record $11.7 billion $1 notes in circulation. The compounded annual growth of $1 bills outstanding since 2010 sits at 3.2%, compared with the 0.7% annual growth in population in the US. The dollar bill is so ubiquitous – and so necessary – that the Fed is sitting on more than $1 billion in dollar coins, outright rejected by the American
China skipped the middle man and jumped straight to mobile technology
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www.ibsintelligence.com | © IBS Intelligence 2017
consumer. Total transactional cash in the US struck $308 billion, enough to give every man, woman and child in America $1,000.
Europe is also pulling its weight when it comes to propping up the cash economy, where the figures are even higher. At the beginning of 2017, transactional cash in circulation across the continent hit €585 billion, more than twice that of the US. It’s clear that, when it comes to hard numbers, cash is still thriving and growing at an exponential rate. Of course, there are exceptions to the rule. In Sweden, electronic payments are so popular and widespread that the country’s central bank has actively discouraged the use of cash.
Disappearing cash
Only one-fifth of Swedish purchases are made in cash, and 95% of all retail transactions are electronic. Cash in circulation in the country fell by 15% in 2016. Even homeless street sellers in Stockholm accept mobile payments. India, despite heavy criticism for its sudden decision to withdraw 100 and 500 rupee bills from circulation, is laying the first foundations for a digital payment network.
The solution? Biometric registration that will allow citizens to open subsidised bank accounts. China, another country with a high percentage of underbanked or unbanked people, has largely skipped the middle man and jumped straight to mobile technology. The number of mobile payments in the country leapt 64% in 2015. That same year, over half of the country’s 710 million internet users were using mobile payments.
M-Pesa, aided by the corporate muscle of telecoms firm Safaricom, also took off in Kenya, where few people had access to a bank account, but almost everyone had access to a mobile
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