The following is based on an article published online by Payments Journal on 25 January 2019 (https://www.paymentsjournal.com/cardtronics-study-shows-cash-is-alive-and-kicking) in which Brian Bailey, Executive Vice-President and Managing Director, North America of Cardtronics, a payments company, and Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group discussed the future of cash.
If you thought cash was on its deathbed, think again. Although there are those who would hasten its demise, and although the gamut of newer payments and form factors is growing ever wider, a study by Cardtronics, a US payments company, shows that cash isn’t disappearing anytime soon – not even among younger demographics that are often described as “digital only.”
Cardtronics’ fourth annual Health of Cash study published in December 2018 reveals some surprising truths about the overall role and importance of cash in economies around the world.
According to the study, “The growing digital payment landscape reflects a natural evolution of technology, not the elimination of cash.” In fact,” it says, “cash remains the durable foundation of the digital economy.”
Overall, the study concludes, cash trails debit as the most preferred method of payment, topping the list for 28% of respondents compared to debit’s 37%. However, just because cash is not first, doesn’t mean it’s last. The coexistence of cash and debit is important in the digital ecosystem.
Cash is also universal. It does not discriminate. It creates financial inclusion for everyone regardless of age, economic background, or whether or not you have a bank account.
Cash is trusted. Consumers see cash as a payment method they can count on anytime, anywhere. It’s accepted everywhere – or so they believe – and they experience frustration when discovering they cannot use it to pay somewhere. So, anyone thinking about eliminating cash should think again.
Consumers also feel they can count on cash in extreme circumstances. Consider the recent disruption of payment networks that was seen in the UK, or the way cash is sought for months after hurricanes, flooding, and other natural disasters. In these situations, cash still works, and people feel most confident putting their trust in a reliable old-fashioned banknote.
When it comes to security, the media is constantly abuzz with word of the latest security measures available for digital payments. Encryption, tokenization, biometric authentication: All good and valuable endeavours, but when asked which payment forms could be described as safe and secure, cash was chosen by 90%, significantly higher than other payment types.
Finally, consumers like the anonymity that cash affords. Digital transactions leave a trail that today’s savvy consumer finds unappealing … not because they are doing anything nefarious, but simply because they do not want to leave a big red arrow pointing fraudsters toward their financial assets, whether those assets be debit card usage data or a personal bank account number.
All this means we shouldn’t believe everything we’re reading on the internet about millennials. As a matter of fact, they are not killing cash, but remain some of its greatest proponents. The study found that the vast majority of millennials always try to keep cash on hand, outpacing other segments, even as they lead the charge on digital payments.
Millennials aren’t the only ones defying expectations. It may be tempting to rely on demographic stereotypes to understand consumer activity, but compare the stereotypes to true consumer activity, and you’ll find that whether old or young, urban, suburban, or rural, consumers all want the same thing: Payments options and variety.
“Freedom and choice are a core part of our democratic way of life,” says Brian Bailey, Executive Vice-President and Managing Director, North America of Cardtronics, a payments company, “and choice of payments is, in fact, no different.
Digital payment trends are ultimately about form factors, not about supplanting cash. Just look at M-Pesa where over 90% of transactions involve cash somewhere in the payments cycle. The innovation we’ve seen with mobile wallets, tap to pay, and digital person-to-person (P2P) products isn’t slowing down, but neither is cash going away. Rather, it will continue to form the basis for future innovations, just as traditional debit and credit cards support so many mobile app-based payment methods today.”
“For all those reasons,” Bailey concludes, “it is clear that cash is critical to the economy and maintains a really important role within a diverse payment mix.”
To download a copy of the 2018 Health of Cash Study and to learn more, visit the Cardtronics’ website at http://www.cardtronics.com/landing/HealthOfCash2018.aspx