Mobile payments unlikely to dent demand for cash - ATMIA

Mobile payments unlikely to dent demand for cash - ATMIA

A new report from the ATM Industry Association (ATMIA) suggests that mobile payments are unlikely to make a dent in consumer demand for cash over the next five years, instead stealing market share from other non-cash alternatives such as debit, credit, gift and prepaid cards.

An unashamed champion of cash payments, the ATMIA commissioned consulting firm Tremont Capital Group to conduct broad-based research across all segments of the retail payments ecosystem in the USA.

While the study found that mobile payments from the likes of Apple and Starbucks are catching on to some extent, uptake still remains limited, with market share shift coming from electronic payments as opposed to the cash-stuffed consumer wallet.

“An analysis of 30 countries during the five year period 2009-2013 showed an average year-on-year increase over this period of cash in circulation of 8.9%, compared to economic growth rates below 3%,” comments Mike Lee, CEO of ATMIA. “In truth, cash use is more robust and mobile payments less stellar in growth than current conventional wisdom might suggest.”

Taken from the perspective of the USA, this analysis might appear sound. In markets such as the UK, where contactless chip-based payments are becoming mainstream, the card in your wallet - or on your mobile - is proving a popular substitute for loose-change at the checkout.

Recent data from the UK's Halifax shows that nearly 85% of all current account transactions made by its customers are now electronic as contactless technology gains traction, online and mobile banking become ubiquitous and 'pay a contact' services such as Paym emerge.

And according to figures from the Payment Council released in May, electronic payments overtook cash payments for the first time in 2014, signalling the beginning of an irreversible shift away from notes and coins to alternative form-factors.

Comments: (3)

A Finextra member
A Finextra member 17 August, 2015, 15:24Be the first to give this comment the thumbs up 0 likes

Might be some wishful thinking weaving its way into their analysis.  Cash use twice the growth in the economy?  Yes, that sure is against "conventional wisdom," especially coming from a player that lives or dies by whether banks buy more ATM's. 

A Finextra member
A Finextra member 21 August, 2015, 08:29Be the first to give this comment the thumbs up 0 likes

I'm wondering, how many of the 30 countries analysed had Mobile Money services such as M-Pesa? Branchless Banking services such as those being launched in India, China, Bangladesh, Pakistan?

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 21 August, 2015, 13:25Be the first to give this comment the thumbs up 0 likes

Some degree of vested interest can't be ruled out but this does largely resonate with the findings given in a recent BBC article. Most specifically:

  • Cash in circulation is growing at 7% per year, which is indeed roughly twice the growth in economy;
  • MPESA is actually used to send cash from sender to receiver, so proliferation of mobile money services absolutely does not mean fall in cash use.