Digital Transactions Authoritative, insightful and timely information for payments professionals
By John Stewart
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If, as the saying goes, cash is king, it’s clinging stubbornly to its throne. Despite the emergence of e-commerce and the secular rise of payment cards around the world, cash usage is growing nearly as fast globally as cashless payments, according to a report released this week by Retail Banking Research Ltd.
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For the 60 countries the London-based research firm examined, cashless transactions in the aggregate rose 7.6% annually from 2010 to 2014, to 417 billion payments. These included card transactions as well as checks, direct debits, and so-called credit transfers, used in some countries to automatically deposit wages and government benefits.
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But over the same period of time the volume of cash withdrawals from ATMs rose almost as fast, at 7.1% per year. RBR uses these withdrawals as a proxy for cash usage, as “reliable” figures on cash transactions are hard to come by in many markets, RBR senior associate Chris Herbert tells Digital Transactions News. Still, each ATM transaction likely denotes multiple subsequent payments. “Cash obtained from one withdrawal would be used for more than one payment,” Herbert says.
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To be sure, cashless transactions are mounting fast and are steadily eroding cash payments. Cards in particular, whether in plastic or digital form, are leading the way. RBR found payment cards accounted for 55% of all cashless transactions last year, up from a 48% share in 2010. Checks declined from an 11% share to 6%, though markets like the United States, France, and India still make heavy use of the paper. Indeed, the check share in the U.S. alone was 12% in 2014, RBR found (though in the U.S. nearly all checks are digitized for settlement through image exchange), compared to 21% in 2010.
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Overall, cashless transactions grew 38% over the four-year period. In the U.S. market, cashless payments grew at a 2.6% compound annual rate, from 112.3 billion to 124.4 billion, or 10.8% overall, according to RBR. Payment cards took a 72% share, up from 60%.
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But cash clearly continues to exert a hold over a significant number of consumers in the 60 markets covered. “We were a bit surprised because of all the publicity about cashless payment,” says Herbert, referring to physical cards as well as e-commerce transactions and the nascent market for mobile wallets.
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Cash remains particularly popular in Central Europe and parts of Asia, Herbert adds. But the allure of cash is still strong in other places, as well, RBR found. “[E]ven in those [markets] where consumers have been quicker to embrace other payment methods, there has been a reluctance to completely abandon cash,” the firm notes in a release about its research.
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