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Where next with cash?

The evidence is there that people are definitely embracing new ways to shop – be it Amazon, iTunes or even supermarket shopping with home delivery. In many cases, cash isn’t even an option when paying at these new outlets – meaning consumers are forced to use alternatives. The meteoric rise of PayPal is a good example of this.  However, around the world consumers are still using cash in traditional face-to-face transactions – the movement in these areas does not seem as dramatic. Therefore, it is still just as important that people can access cash when they need to.

Many of the historically unique points of an ATM have now been eroded, paying bills, airtime purchase, and transfers all can be done easier and more effectively with mobile or internet banking. The ATM has a unique selling point over all other forms of electronic payments – it can handle money. The only other place you can do this is in the branch, and who goes in there anymore? The ATM provides interaction with the customer – but this too is no longer a unique selling point as more customers use electronic channels to do their banking – a channel that has better interactivity and more opportunity to communicate with the customer.

I am showing my age when I describe the collective groan of a supermarket queue when somebody in front of you said those dreaded words – “can I pay by cheque?” Everyone knew that would delay the transaction. Any weekend visit to a mall be it in Asia, the Middle East or in the Europe will still see queues at the ATM – highlighting that cash is still an important part of the worldwide purchasing chain. And as soon as someone starts doing multiple transactions – or non-cash transactions – I believe you can still hear an audible groan in the queue

Getting cash is a chore – no one sees it as a benefit to spend longer doing chores. Banks have already acknowledged this in ATM deployments – allowing Customer Terminals that offer additional functionality to be separate from ATMs – but I believe the future should be as cash only machine. Let the interaction happen at the mobile device – and let cash be king at the ATM.


Comments: (4)

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 13 June, 2013, 10:25Be the first to give this comment the thumbs up 0 likes

Although it was only yesterday that I waxed eloquently about how banks in Asia have extended the role of ATMs, I totally agree with you about the "audible groan in the queue" whenever someone tries to use an ATM for anything other than cash withdrawal. (As a matter of fact, the bank's own security guard tried to shoo me away when I whipped out my smartphone to scan the QR code displayed on its ATM's screen!). That said, online and mobile channels still have too much friction for a lot of transactions - so much so that cash is even used for a majority of non face-to-face transactions in India (COD has 70% market share in ecommerce)! I see banks striking a practical middleground by restricting ATMs for cash withdrawal and using KIOSKs for bill pay, mobile topup and other transactions (with cash, cheque and cards).

A Finextra member
A Finextra member 13 June, 2013, 16:49Be the first to give this comment the thumbs up 0 likes

It is interesting Dave, that many of us in the ATM business are of an age to remember cheques.  You don't see too many young faces in ATM-related meetings. I think they are all at the Mobile Banking meetings.  This observation is more important than it seems - young people bring new ideas and challenge the accepted wisdom of an industry.  The ATM industry doesn't have enough of that going one - we have too much legacy thinking which is why our systems are harder and more expensive to manage than they should be.  Note that I don't excuse myself from my own criticism. Only last month I was accused of "20th Century Thinking" by a young designer challenging orthodox thinking on disaster recovery planning - I had to admit that he was right!  

I'd go further than to say getting cash was a chore - I'd say it was a utility service, like water and electricity. Why do banks continue to think they can all do it differently and better than the bank next door? Time for ATM pooling?

A Finextra member
A Finextra member 14 June, 2013, 04:23Be the first to give this comment the thumbs up 0 likes

OMG Jim LOL (an attempt to look 21st century – which will be deemed pathetic by any truly hip young person – the written equivalent of ‘dad dancing’ ).  

You are quite right I think the term ‘Utility’ is much better. I hate the thought that I am a curmudgeonly old man at what I feel is such a young age –but the sad fact is that ATMs are just not ‘sexy’ anymore and the even sadder is that they probably never were.

@Ketharaman you raise an important point with alternative payment methods – the adoption is cultural. COD is not a payment method generally used across Europe yet in Asia it is. This prevents the need for alternative payment methods and of course stimulates the demand for cash.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 14 June, 2013, 13:14Be the first to give this comment the thumbs up 0 likes


While the choice of an MOP has cultural underpinnings at some level, my point is related to friction: Because the triumvirate of regulators-banks-vendors is unable to strike the right tradeoff between convenience and security of alternative payments in many countries, several people - including me - are being driven back to cash after having used alternative payment methods for several years, like I pointed out in this post earlier today:

Open Letter To My ePayment Gateway Company

And, going by the reports claiming that the use of cash is rising virtually everywhere in the world, including Europe, this trend is not cultural. After all, wherever they are, people want noncash payments to become like a utility instead of their having to go through so much song and dance about it. That's still a long way off. 

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