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The cash contradiction


While UK consumers are enthusiastic about digital payments, the amount of cash in circulation continues to rise. Cash is seemingly a hard habit to break.

Contactless payment tripled in 2016, accounting for seven percent of payments, according to Payments UK. It’s a similar story online. Brits spent around £1.1 billion online per week in August 2017, a year-on-year increase of 16 percent, the Office for National Statistics says.

Yet cash is not in decline — far from it. Bank of England notes in circulation increased by ten percent in 2016, reaching over £70 billion in the run-up to Christmas. This was the fastest growth in a decade. And the UK is not alone in this.

Cash still king

Recent figures from the Federal Reserve Bank of San Francisco show that in the decade to 2016, cash in circulation matched or outpaced the growth of GDP in 40 countries. Among the countries surveyed, only Norway and Sweden experienced outright declines in cash in circulation. “The rumours about the death of cash have been exaggerated,” says Ron Delnevo, executive director of ATMIA, a trade association for the ATM industry.

The poster child for the cashless society is always Sweden, however it is a long way off being a cashless society, claims Delnevo. “Despite ATMs being taken out, cash being made less convenient, the currency being managed by the commercial banks rather than by the central bank and so on, still 20 percent of purchases are made using cash. 97 percent of Swedish retailers still accept cash,” he says.

Cash characteristics

Cash is quick, convenient, portable, private and accepted widely. These properties are still required, which presents one of the main challenges of going cashless or cash-lite. Sometimes there is just no reason or business case to do so. Granted, cash is not great for every scenario, such as remote payments or remittances. Yet consumers, businesses and retailers are seldom looking for a new way to pay.

“If you look at the Eurozone as a whole, research from the European Central Bank indicates that 79 percent of all purchases made in Europe are still made in cash. So, while there are national differences, the overall picture is people Europe-wide still prefer to use cash,” says Delnevo.

Cashing up

Given that cash will be around for a good few years to come, the question is less about stopping cash operations. It is more about how to make them more efficient. ATM technology is helping in this regard with contactless and even card-less withdrawals pre-staged via mobile phone. ATM functionality also now includes bill payment, mobile phone top-up, funds transfer, donations, cash and cheque deposit and so on. Since 2010, CashFlows has been working with the largest independent ATM deployers across Europe. It is actively involved in sponsoring clients through direct membership of all the major international card schemes.

Cashflows is an experienced and reliable outsourcing partner. We are the principal ATM sponsor for the UK’s leading transaction processor, and settled £1.7 billion from 35,000 ATMs in 2016.