Extinction, dinosaurs and a referendum - a distorted view of cash

6 October 2016

United Kingdom

Paul Race



I read with interest a 26 September article which stated that card payments will surpass cash payments for the first time ever this year.  The article cites research from Euromonitor International which claims card payments worldwide will total $23.1 trillion this year. Now that’s a vast number but of course it also means that a similar, if slightly smaller amount, is still spent using cash.  In fact the figure quoted is $22.6 trillion.  The announcement may represent a landmark but is there any reason to get excited? Two things strike me; globally we are hardly talking of a ‘cashless society’ -  the value of cash payments actually increased last year - and the article quotes MasterCard and McKinsey as reporting that ‘cash is still used for 85 percent of all transactions worldwide’.

Headlines that state ‘cards overtake cash’ can be misinterpreted in a country recently confronted with ‘yes’ or ‘no’ choices.  In Scotland, where I still live, and in the UK we have recently been given the opportunity to vote on two issues, Scottish independence and what has become known as Brexit.  In these circumstances it came down to a straight choice for each individual.  It wasn’t a case of being 75 percent in favour, you were either in or out.  Though some will argue whether the Brexit referendum was ‘legally binding’ on the government, the fact remains that nearly 52 percent of those who voted chose to leave the EU and the government is responding to that result.

Why is this relevant?  Well the fact that more payments (by value) are made using cards has no real implications for the immediate future of cash.  This is no ‘the people have spoken’ moment.  Indeed, if you look at the volume of payments you would get a very different ‘result’.

There are still massive volumes (and values) of cash payments worldwide.  While people continue to choose cash as a means of payment so the challenge of how you best process it remains for retailers globally.

Even in those countries where steps are being taken to ‘eradicate’ the use of cash it is not the ‘dinosaur’ some would have you believe.  A colleague of mine recently took 600 euros to Amsterdam and had no problems paying for Ajax tickets, accommodation, museum entrance and food and drink, though he confesses there wasn’t a great deal of cash left at the end of the trip.  He’s hardly alone.  A recent BBC report stated that ‘electronic payments in the Netherlands’ shops and supermarkets overtook cash payments for the first time in 2015 by a narrow margin: 50% debit cards while 49.5% were paid for in cash the remaining 0.5% were credit card-payments’.  There’s that ‘referendum’ moment again. The article was entitled ‘the countries where cash is on the verge of extinction’.  If so that’s still a lot of dinosaurs. Apparently a consortium of Dutch banks and retailers is targeting a reduction of cash payments to 40 percent by 2018.  I suspect cash will be around there for a while yet and the Netherlands is much further ‘down the road’ than most of its European neighbours.  The article concedes that in the far larger Germany and Italy the percentage of payments made using cash remain at 75 percent and 83 percent respectively.

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