Cash ensures competition among payment instruments

The digitisation of payment instruments increases the number of people in a situation of monetary exclusion. Digital payments have become essential to fully participate in socio-economic activities, although they are not accessible to all.

The downward trend in cash use has stopped in Switzerland. Around every third payment is made in cash. However, more money is spent on credit cards.

Banks are closing 24-hour ATMs early in New York City for “safety and security” reasons. The Metropolitan Transportation Authority expects the OMNY contactless payment solution will reduce the amount of cash it gets from riders.

Card payments have regressive distributional effects: cash and debit card transactions subsidize credit card payments, and credit cardholders tend to be higher-income consumers.

U.S. credit card debt rose at its highest rate since 1999 in the third trimester of 2022. Most of the increase occurred amid younger and less wealthy cardholders.

New York City passed a cashless ban in February 2020 to protect the right of consumers to pay in cash, including those from unbanked households.

According to the ECB’s latest SPACE study, cash is the most frequently used payment method at the point of sale in the euro area. Most consumers consider cash as a payment option important or very important.

Elsewhere on the Web provides links to articles on cash, money, and retail payments.

Mastercard is facing a £14 billion class action lawsuit over interchange fees, after a failed appeal was denied by the Court. If successful 46 million claimants could receive £300 each.

The Bank of Finland estimates that the social costs of retail payments amount to 0.3% of GDP. Card payments represent 39%; credit transfers 38% and cash 23%. In terms of the cost per transaction, a card payments costs 15 cents versus 22 cents for a cash payment. Banks have increased their payments revenue, but merchants have not benefitted from the digitalization of payments.

An ECB survey shows that cash is the preferred payment method for 24% of companies, ahead of other alternatives. Most companies also perceive cash as a cheaper, faster and more reliable payment instrument.

While some consumers resort to credit card debt, BNPL schemes, and pawnbroking, others privilege cash to make ends meet during the U.K. cost of living crisis.