Cash – why it's here to stay

  • Recent statistics by Visa Europe have shown that at least one-in-five card transactions are now tap-and-pay, compared to just one-in-sixty in 2013. In fact, Visa had three billion contactless payments in Europe in the last year alone - triple the amount of the previous twelve months. Likewise, the UK Card Association revealed that £1508.4m was spent on contactless cards within the UK during March 2016. This amounted to an increase of 250% on the same month in the previous year.


    With such statistics, it’s no surprise that many are questioning the future of cash.


    Certainly, there are a growing number of payments made electronically, thanks to the continued introduction of mobile and wearable technology. In recent years we have seen the emergence of Apple Pay and Android Pay, and beyond mobile, FitBit devices are promising to unveil payment features. This has led Payments UK to posit that contactless stands to oust cash by 2021.


    Yet, I would argue that we should not only be sceptical of this claim but there are reasons to believe it will be cards, not cash, that will see growth slow in the coming years.


    There are two reasons for this: one, a systemic mistrust in technology due to the apparent ease of hacking and defrauding; and two, the continued convenience of cash for individuals and businesses. This latter point is particularly key – whilst mobile will almost certainly overthrow cards and contactless, the role it plays is distinctly different to that of cash, which is non-dependent on technology, convenient, and a great resource for emergency funds.


    Supporting my suppositions is recent research undertaken by YourCash. This highlighted several security and popularity-based limitations facing contactless payments. Our OnePoll survey of 1,000 Britons showed less than 10% of participants claimed to use contactless on a daily basis, compared to 39% who used cash. Likewise, only 13.5% chose contactless as their method of choice for ten years’ time.


    Even amongst millennials, the ‘digital natives’, just 3.5% actually use mobile payments on every day. Only slightly more popular was the contactless card, with around 15% saying they used it daily and 17% believing they’d still use it in 2026.


    In fact, a meagre 2.3% of those surveyed thought contactless was the most secure of payments option, compared to 50% who selected cash.


    One of the key reasons for these results was the prevalence of security-related concerns on contactless, with 97% speculating that tech-based payment options were not secure. Many consumers worry that criminals will begin to target contactless payments for an easy and quick payday – the same goes for mobile transactions.


    What’s also interesting to note, is that the most cash-free society in Europe – Sweden – has allegedly experienced a two-fold increase in financial crime in the last decade. Could this be related to the fact that 80% of their transactions are now made electronically?


    Whilst the mix of payments available may be increasing, these are still very much in their infancy in the public mind. Consequently, we must not over-estimate the impact they will having on traditional forms of pay.


    Cash is still the transaction method of choice for more than half of consumers (52%), and we are also seeing a rise in the number of ATM cash withdrawals across the UK. LINK’s network, for instance, saw an all-time record of £128 billion worth of withdrawals out of its 70,000 ATMs in 2015. Therefore, I’m certain that cash will remain a firm favourite for consumers all over Europe for quite some time.


    - By Ewan Ogilvie, Managing Director, YourCash Europe Ltd