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Cash and cashless payments continue to fight a battle without an absolute winner

Cash and cashless payments continue to fight a battle without an absolute winner

Marcel Woutersen

Senior Communications Consultant

22 January 2016

Cash and cashless payments continue to fight a battle without an absolute winner




Cashless payments are rapidly gaining foothold, but cash still remains resilient. According to RBR’s study‘Global Payment Cards Data and Forecasts to 2020’ cashless payments are increasing at only a slightly faster rate than the number of ATM cash withdrawals. This suggests that cash is still favoured as a means of payment for a significant proportion of the global population. How can this development be seen in the ongoing ‘War on Cash’?

Cashless payments are growing strongly globally as a result of increased bank account holding, continued growth of e-commerce and general migration of cash-based transactions to electronic payment instruments, supported by constantly improving technology. Several industry experts already predicted the end of the era of cash payments, but even in today’s expanding market of digital payment options, cash remains a leading payment form, says Chainstorage. According to a survey of over 1,000 consumers by Cardtronics, cash is still widely used and frequently selected for making all sorts of payments, in spite of people having access to and using a greater variety of payment methods.

Open-minded view of payments

According to that article ‘Millennials take an open-minded view of payments and cash plays a pivotal role in their payment choice mix’. The open-minded view is necessary in a world with rapidly expanding payment methods such as mobile wallets, contactless payments or the introduction of peer-to-peer-payments; all these innovative technologies can be seen as fierce competitors of traditional cash payments. It seems that all of them are welcomed as the next big thing in payments, but old habits die hard. Sometimes they do not even die, but are reborn. This is the same for cash payments. Although we have seen numerous new challengers in the market, all claiming to be faster and more secure, cash remains king for most part of the world.

The appetite for cash remains strong as ATM usage soars, according to Finextra on the RBR study. Data from analysts at RBR show that global ATM cash withdrawal volumes grew by seven percent in 2014 with a total of 92 billion withdrawals made. “In more mature markets, however, ATM usage levels are stagnating or even declining, but all regions except North America saw growth in the total volume of withdrawals”, says the article.

Consumers are comfortable with multiple payment options

In the comments, Kethamaran Swaminathan, shares his view on the usage of cash: “We’ve been hearing for a long time that Japan (along with South Korea) has a lead of 5-6 years over the West in mobile payments. At the same time, according to Life in Japan: Where cash is kingcash is still heavily used in Japan. I don’t see this as a contradiction. Instead, I see it as evidence of my long-held view that consumers are comfortable with multiple payment options. It also debunks the finsurgent notion that a newer payment method (e.g. mobile payment) will kill an older payment method (e.g. cash).”

This means that a new payment method won’t cannibalize older payment methods entirely; it just implies that consumers have more payment methods. “Cashless payments other than cheques are becoming more common around the world as consumers begin to respond to campaigns launched by banks, retailers and governments to reduce cash usage. There has also clearly been a rise in consumer trust in electronic payments as a result of their enhanced convenience and security. Cards, in particular, are increasingly being used in sectors which would have been the preserve of cash in the past,” states RBR in a press release.

In conclusion the demand for cash remains strong in some regions, however, and even in those where consumers have been quicker to embrace other payment methods, there has been a reluctance to completely abandon cash.