Cash is dead. The introduction of Apple Pay in the UK means that consumers can soon leave their wallets at home. At least that's what some are predicting. But perhaps we should take a moment before we consign cash to the transactional trash.
Over the last fifty years, various payment methods have been introduced: cheques in 60s, credit cards in 70s, debit cards in the 80s - all the way to the contactless payment systems of today. Yet today cash remains the single most popular consumer payment
method, accounting for 52% of payments.
Now there's a new contender. Apple Pay is a powerful tool that offers some people a simple, convenient and secure way of paying for goods.
But there are caveats. Firstly you need an iPhone 6 or 6 Plus to use the service (or an iPad Air 2 or iPad mini 3 for online only purchases). Transactions are also limited to £20, expected to rise to £30 in September.
Apple Pay was introduced in the US last year. About half of the top 100 US merchants are expected to use the service in 2015. According to a Reuters survey, the top reasons cited by US retailers for not adopting Apple Pay were insufficient customer demand,
lack of access to data and the cost of implementing contactless technology.
In other words, while Apple Pay is an exciting technology, there are a number of limiting factors. Cash, meanwhile, is a known quality supported by an established and universal payment infrastructure.
In total, over 18 billion cash payments were made in the UK in 2014, the equivalent to almost 50 million payments a day. Over £189bn in cash was withdrawn from UK ATMs during 2014, compared to £2.32bn spent using contactless cards.
Meanwhile the Bank of England is gearing up for the release of new polymer notes, starting with the Winston Churchill £5 next year. It's an investment that shows confidence in cash.
So why has cash remained so resilient, despite the introduction of new payment methods? Consumer behaviour can be hard to model. There are numerous factors economists can take into account but social factors are harder predict; such as people's shopping
habits and when and where they switch to and from cash.
Undoubtedly, more low value transactions will be made via services like Apple Pay in the future. More options can only be a good thing. But tried, tested and trusted cash can be depended upon for years to come.