Despite the Rise of Mobile Payments, Cash is Still King

21 June, 2017


With all the recent hoopla surrounding mobile payments, EMV embedded-chip payment cards and wearable payment devices, it might make some people believe that cash as a form of payment is on its way out. But it’s not. In fact, cash is experiencing something of a resurgence recently. According to a report from Retail Banking Research Ltd. (RBR), cash usage is growing nearly as fast globally as are cashless payment methods. The research firm looked at the transaction trends in 60 countries, and found while cashless methods – which include card transactions, checks, direct debits and credit transfers – rose 7.6 percent annually from 2010 to 2014, the volume of cash withdrawals from ATMs, which RBR uses as a proxy for cash usage, grew almost as fast, at a rate of 7.1 percent over the same four year period. That rate is even more impressive when you consider that each ATM withdrawal likely represents multiple payments.

Since the debut of computers and credit cards half a century ago, experts have been predicting the death of cash, with many in the mid-1960’s predicting that paper currency would be gone within a decade. But that never happened, and we are still using cash to complete about 40 percent of all transactions, according to a 2014 study by the Federal Reserve. This is despite the increasing use of mobile payments like Apple Pay and Android Pay, which seem to be attracting people to try them out but don’t have many repeat users. A study by PYMNTS and InfoScout found 24 percent of respondents had used Apple Pay in June 2016, a 13 percent increase from June 2015. However, the number of people who rarely consider using Apple Pay jumped 11 percentage points from 23 percent to 34 percent. Combine the mobile payment statistics with those of cash usage, and it appears most people are not yet willing to forego cash for mobile.

However, cashless transactions are steadily gaining ground on cash payments. The RBR report found payment cards accounted for 55 percent of all cashless transactions in 2015, with paper checks declining from 11 percent to 6 percent, although some international markets, including the U.S., still rely heavily on paper checks (the U.S. alone had 12 percent check usage, but that’s down from 21 percent in 2010). Payment cards accounted for 72 percent of all U.S. cashless transactions.

Cash is still the payment method of choice for many people in the 60 markets covered in the RBR report, particularly Central Europe and parts of Asia; however, even in markets that have been quick to adopt cashless payment methods, the people are still loath to totally abandon cash. And then there’s the security issue – with cash, there are no worries about data breaches, identity theft, hacking, cybercrime, credit card fraud, etc. The only real security issue with cash is if it’s lost or stolen, it’s just gone. A bank or credit union insures your funds in the case of fraud or theft if your account is compromised or your payment card is stolen or lost, but there is nothing they can do if you lose your cash.

It may also be surprising to discover that in today’s technology-driven world, a full 55 percent of small businesses in the U.S. do not accept payment cards. Part of the reason is the cost – accepting credit cards can cost up to 4 percent per transaction, and that may just be more than many businesses, particularly the smaller of the small businesses, want to take on.

Cash can also be sentimental. Putting a $20 bill in your nephew’s birthday card elicits a thrill from the recipient that a paper check or gift card just can’t match. It can also tell the story of a nation, when you look back at how currency has changed over the years. If cash goes away, that chronicle of our time for future generations is lost.

Despite the doom and gloom predicted for cash, it is still going strong, and even growing in usage. There will always be new payment methods cropping up (among the latest are NFC-embedded payment tattoos), and stories of completely cashless societies will circulate around the internet, but in the end, there’s nothing like cold, hard cash. It doesn’t appear to be going anywhere anytime soon.


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