04 December 2016

Appetite for cash remains strong as ATM usage soars

05 January 2016  |  8838 views  |  20 ATM

Strong growth in ATM cash withdrawals over the past year suggest that proponents of the War on Cash are fighting an uphill battle.

According to data from analysts at RBR, global ATM cash withdrawal volumes grew by seven percent in 2014 with a total of 92 billion withdrawals made. Growth in the number of ATMs was even higher, and the global installed base passed the three million mark.

The upsurge in usage was most evident in the Asia-Pacific and Middle East and Africa regions - in many developing markets ATM uptake is growing at a far greater pace than machine deployment. Both Bangladesh and Vietnam saw annual withdrawal volumes rise by a quarter - driven by increasing numbers of cards being issued to their large unbanked populations - although these countries’ installed bases only grew by 11% and four percent respectively.

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.

Globally, the increase in ATM usage is forecast by RBR to outpace the growth in the installed base of ATMs between 2015 and 2020, to reach 128 billion, indicating that the appetite for cash remains strong.

Comments: (20)

Dean Wallace
Dean Wallace - TSYS - York | 05 January, 2016, 16:34 There's something nice about having cash in your hand. It's real. No-one says "you have to spend £5 to use that here". You can slip it inside a birthday card. But you do easily run out, knocking convenience. ATMs are notoriously flaky, knocking convenience. And if you go somewhere like Sweden they've pretty much killed off cash, and upgraded commerce and habit to support. Guess it just depends on where you are, but clearly what is being demanded now is more choice, not necessarily a replacement of something else.
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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 06 January, 2016, 10:36

@DeanWallace + 1.

Consumer preferences also keep shifting between one mode of payment to another due to charges, friction / CX and other factors.

I went from Card to Cash on Delivery for online transactions due to 2FA friction; from online / card to offline / cheque or cash for bill payments due to 2FA friction and exorbitant "online gateway" charges, then back to card when I found HDFC Bank PayZapp.

Just yesterday, a fintech professional was so put off by the friction involved in using Venmo for transferring money to herself that she vented her ire on Twitter: "Sad note to self for next time: write a check."  (https://twitter.com/cjc/status/684131336135692289)

Fintech professionals may treat a certain MOP as Holy Grail whereas consumers have no such "cast in stone" preferences: They're perfectly comfortable with multiple MOPs and use the one that best suits their context i.e. they want choice.

After seeing a few ecommerce websites / apps displaying so many MOPs, I recently noted that their checkout page looks like their product catalog pages. Purists might balk at this approach but consumers seem to be perfectly comfortable with it. This finsurgent rhetoric about one payment method killing another is simply not consistent with real world consumer behavior.

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A Finextra member
A Finextra member | 07 January, 2016, 01:58

It's like the war on terror - just when you think we've wiped out the little blighters, they come back again. As much as it pains me to say it..Cash is still king, globally it beats the pants of all forms of electronic payments. Here are my predictions for 2016.

A Nordic country will announce "we are near to being cashless" only to find that by cashless they mean about 90% of all KNOWN transactions are non-cash.

Someone from Visa and/or MasterCard will announce that contactless transactions have increased by 302% in the last year (but still only account for less than 10% of all card transactions - and most of these are on buses/tubes.

A study by a leading retail bank will predict that cash costs the UK economy xx% every year - and this costs the customers £xxmillions per year.

Alibaba will announce that 300 million people used a card to buy a red lantern for CNY.

Taxi drivers in London will still act like petulant children and refuse to accept cards - and that UBER is killing their business. PS Funny how fares haven't gone down despite there being a 30% drop in derv prices the last year.

The staff at the Visa HQ in Paddington will continue to be embarrassed by the sign in staff canteen which reads “cash only, machine not working”. And the former head of Visa Inc might not say “It’s ok, cash is quicker” when paying for his breakfast.

 

 

 

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A Finextra member
A Finextra member | 07 January, 2016, 09:36

ATMs are notoriously flaky?
Quite a daming statement if ever I heard one. And basically untrue.

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Dean Wallace
Dean Wallace - TSYS - York | 07 January, 2016, 11:10 @ Anon. Yeah, you're probably right. They used to be bad about 10-15 years ago, but much better now
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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 07 January, 2016, 11:36

Better now? I just complained that my bank removed the "Favorite Transaction" feature on its ATM. When it was around during the past 2-3 years, it had cut down transaction times and resulted in shorter queues. Now, we're back to the earlier longer queues:(

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Bo Harald
Bo Harald - ZEF and Real Time Economy Program - Helsinki region | 07 January, 2016, 18:14

Cash usage has declined for the last years steadily and significantly in Finland. Maybe the consumers understand that they pay every cent of the 50bn euro cost (EU study) merchants are loaded down with every year. This even if cash appear to be free..

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Bo Harald
Bo Harald - ZEF and Real Time Economy Program - Helsinki region | 07 January, 2016, 18:16

It should be taught in schools (and to elderly people) that digital is cheap and non-digital (cash, cheques and paper or PDF invoices ) are some 10 times more expensive... You here of course understand it.

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James Piggot
James Piggot - Misys - London | 08 January, 2016, 09:27

Quite agree Bo that's why supermarkets in the UK offer customers paying by card a cashback, essentially make a ATM withdrawal at the same time as paying for your groceries. They are keen to avoid the cost of processing cash which as you say is expensive.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 08 January, 2016, 10:26

It should be taught in schools that one should always listen to the views on something only from the people who are most affected by that something. As I'd highlighted in Cash in Hand Is Worth More Than Card In Bush, digital payments have a lot of hidden costs because of which, merchants, who are most affected by the purported costs of cash, rarely refuse cash.

If cashback is really meant to avoid the cost of processing cash, UK supermarkets should be happy give out any amount of cashback, shouldn't they - after all, "more the merrier" for them. Why, then, is there an upper ceiling on cashback of GBP 25 or some such small figure? Just asking.

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Bo Harald
Bo Harald - ZEF and Real Time Economy Program - Helsinki region | 08 January, 2016, 10:34

Clinging to the past has never been a good strategy.

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James Piggot
James Piggot - Misys - London | 08 January, 2016, 11:05

Yes cashbacks were invented by Tesco to reduce the cost of transport, insurance and the charges of depositing the cash in the bank. As the fee of the debit card transaction is fixed, the cashback does not cost the retailer anything extra. By reducing the amount of cash they have to handle they are reducing their costs.

The maximum amount for cashback allowed here in the UK varies between £50 to £100, mainly to limit the amount of fraud as cashback is a favorite target for criminals.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 08 January, 2016, 11:28

The last time I checked, this article covers 2014, 2015 and 2020. That sounds like future to me. Denying the future just because it doesn't corroborate past predictions, has never been a good strategy.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 08 January, 2016, 11:33

"As the fee of the debit card transaction is fixed, the cashback does not cost the retailer anything extra" aka no extra fee for cashback part of the card transaction. That explains it. Ask the retailer to put through another transaction, solely for cashback, let's see how many retailers find handling cash costlier than the fee on the card transaction, and agree to give cashback.

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A Finextra member
A Finextra member | 08 January, 2016, 11:34

In the UK, plenty of retails do just that. Depends of course on their operating model but generally the Grocery stores.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 13 January, 2016, 10:40

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).

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 20 January, 2016, 13:23

"...nearly half (45%) of that group (of Millennials) also said that they’re more likely to pay more with cash now than they did a few years ago."

Cash still king for many consumers

I've long held that shifts between cash and noncash payment methods are bidirectional. This article shows that this is true even of Millennials.

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Mike Rew
Mike Rew - Lloyds Banking Group - London | 20 January, 2016, 13:27

Using Cash allows individuals to control their spending better. "Once you've run out of Cash, you can't buy any more. It's too easy to spend using card/contactless" I've heard this many times.

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Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune | 20 January, 2016, 14:24

When many people run out of cash, they run to the nearest ATM:) Many merchants have told me to do the same when I refuse to pay by cash and they're (temporarily) unable to accept credit cards due to POS / network / server malfunction. Nevertheless, I do know several people who spend only whatever cash they have at that moment (despite merchants' efforts to point them to the nearest ATM). Therefore, I agree that cash can serve as a powerful control over spending for a lot of people.

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Bo Harald
Bo Harald - ZEF and Real Time Economy Program - Helsinki region | 16 November, 2016, 11:56

An increasing number of citizens do not carry cash at all. That is why we need easy mobile and x-banks real time payments - like the Siirto launched today in Finland.

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