Cash: a wider perspective

4 October 2016

United Kingdom

Paul Race



Recent focus on the G20 Summit encouraged me to take a global look at cash, or at least at the situation in four countries with which I have become fairly familiar.I’ll confess it wasn’t a particularly scientific approach, but a brief Google search was sufficient to encourage me that in all four (India, Japan, UK and USA) cash usage is a hot subject. In the UK, Link has just announced that the August Bank Holiday period saw record levels of cash withdrawals from ATMs. On 29 August, more than £280 million was withdrawn from Link’s 70,000 cash machines, up 4 percent on the previous year. Certainly food for thought for UK retailers seeking the most efficient means of processing cash payments.

Meanwhile my search for information on India led me to an article about the Reserve Bank of India’s ‘Concept Paper on Card Acceptance Infrastructure’ published in March this year. A couple of figures jumped out at me, Firstly, debit card usage at ATMs accounted for 88 percent of total volume and 94 percent of value of debit card transactions. In December 2015 there were 108 million debit card POS transactions and 708 million ATM transactions. The amounts transacted were 146 billion rupees at POS compared with 2,205 billion rupees withdrawn from ATMs. In addition, looking at the period between October 2013 and October 2015, whereas POS terminals increased by 28 percent, during the same period there was a 43 percent increase in the number of ATMs

In the US, two current issues are the impact of negative real interest rates and the introduction of EMV. In a recent ATM Marketplace article, Daryl Cornell, CEO of Triton highlighted how negative interest rates could lead to a spike in cash holding in the absence of a return on investment. He also pointed out that delays in implementing EMV in areas such as fuel pumps could lead to further changes in the way people pay and a possible increase in cash usage.

On a recent business trip to Japan I witnessed at first-hand how individuals continue to carry relatively large amounts of cash. Perhaps this is hardly surprising in a nation that Fortune magazine once described as ‘deeply in love with cash’. I was pleased to have my observations confirmed in a recent blog by Katie Anderson, an executive coach until recently based in Tokyo. She confirms that ‘paper and coins rule in Japan’ and says that that ‘many restaurants that take credit cards in the evening insist on cash payment during the day and many stores flat-out don’t take credit cards’.

Japan’s love of cash is now being taken to new extremes as negative interest rates bite.  In April it was announced thatthe Bank of Japan would increase the number of 10,000 Yen bills printed to 1.23 billion notes in 2016, an increase of 180 million on the previous year.  It is reported that a major reason for this is a rapid rise in the amount of cash being hoarded.  According to Hideo Kumano, chief economist at Dai-ichi Life Research Institute ‘cash stashed at home is estimated to surged by nearly 5 trillion yen to some 40 trillion yen in the past year’.

New ATM records in the UK, continued focus on cash in India with low debit card usage at POS, EMV pressure in the US and record numbers of notes being printed in Japan – and all this at a time when ‘cash is dead’!

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