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Consumers are bearing the cost of cash

Categories : Cash is trust
October 5, 2016
Tags : Banknote/Note, Card payments, Legal tender, Mobile Payments, Money
Banks are simply betting on the payment method with the highest returns.
Communication Team / Equipo de Comunicación

In her BBC article “The countries where cash is on the verge of extinction”, author Lauren Comiteau tried to experiment with cash only payments in the Netherlands only to quickly realize that it’s almost impossible to get by without a card or a mobile payment option.

For example, paying rent or a telephone bill in cash only sparks scolding looks. But obstacles are present even when making smaller purchases such as groceries (where cash only lines are the longest) or when paying for parking – impossible without a card.

Electronic payments might be a fad or it could simply be out of pure convenience that consumers choose to pay with plastic instead of paper. Yet, what consumers often fail to understand is that this trend is motivated by profit margins; and the sums at stake are considerable.

Banks don’t earn as much with cash as they do with plastic. In less cash-centric societies, banks increasingly charge clients for withdrawing and depositing cash . But cards offer even greater returns, making them more attractive. They generate revenue each time there’s a swipe – and the fees for retailers can be alarmingly high.

In other terms, it is not consumer demand for cash which is declining. It is the supply side, which is making it increasingly difficult and expensive to withdraw and deposit cash.

To read Lauren Comiteau’s article, please click here.