Cashless society like a mirage in the desert

Cashless society like a mirage in the desert

Proponents of the cashless society should look away now: New figures from the UK's Link ATM network reveal that consumer demand for cold hard cash shows no signs of abating.

Cash withdrawals from Link's network of over 70,000 ATMs in 2015 amounted to a record £128 billion - made during over two billion visits.

The total number of cash withdrawals only grew slightly in 2015 (by 0.8%) with the value of those withdrawals increasing by 2%. The amount cash machine users withdrew also went up - with the average withdrawal value increasing from £61.25 in 2014 to £61.93 in 2015.

John Howells, Link CEO, comments: “These figures show that cash remains a very important part of our lives here in the UK and is still the most attractive payment option in lots of situations. With the amount of money being withdrawn continuing to increase, it is clear that cash has an important place in our wallets and purses for the foreseeable future."

In a report back from the Mobile World Congress jamboree in Barcelona last week, Consult Hyperion's David Birch, a fully paid-up member of of the 'War on Cash' brigade, bemoaned the dissonance between the futuristic presentations of a cashless utopia on the MWC stands, and the starker realities of life on the streets.

Posting a pic of a long line of people queuing for an ATM, he says: "Twenty years of mobile payments, twenty years of presentations about mobile payments at MWC, twenty years of pilots and trials and tests and MoUs, twenty years of arguing about SIM vs. embedded vs. SE, twenty years of closed-loop and open-loop and three-party and four-party, and there’s a queue a mile long for the ATM because you can’t use your phone to by a metro ticket or ride the bus into town. Where did it all go wrong?"

Comments: (12)

A Finextra member
A Finextra member 01 March, 2016, 12:59Be the first to give this comment the thumbs up 0 likes

We have to be very careful with payment capabilities

  • Existing payment instruments (i.e. cash) are part of daily people lives, thus will stay this way for years to come.
  • Despite all efforts to establish mobile payment systems, they are still not flying as expected simply because the majority of banks is still hibernating and playing silent partner role.

The game changer has just popped Chase Pay into the market; Keep your eye opened and you shall see what the future will bring.


James Cranfield
James Cranfield - Insight Consultancy UK Ltd - Madrid 01 March, 2016, 13:30Be the first to give this comment the thumbs up 0 likes

Just like other wars, you have to fight cash on several fronts.  It won´t be won by mobile alone, or by contactless, or by purchasing cards, but a combination of all new form factors and better education about the downsides of cash.  

It shrinks in value, it´s dirty, it´s untraceable, it´s expensive, it´s risky. (And yes, I know the untraceability is a virtue for some). 

The war on cash will be won but the "less cash" era will precede the "cashless" era.

A Finextra member
A Finextra member 01 March, 2016, 15:411 like 1 like

In Sweden today some 85% of everything sold over the counter by retailers to their customers is paid for with a debit- or credit card. The card payment numbers rise some 8% per annum and the atm cash withdrawals have been dropping for the last five years by some 8 -9% per annum. OTC cash withdrawals hardly exist in Sweden and a very large portion of bank branches do not have a cash till.  It is easier to find a retailer who does not accept cash than to find one that refuses MasterCard or Visa. Person to person payments are increasingly managed by the mobile phone based interbank realtime money transfer service Swish with more than 3 million users of a population of 10 and under rapid expansion since the launch two years ago.  The development is similar in Norway, Finland and Denmark. Electronic payments is about user convenience, cost effectiveness, security and reach and not about a war on cash. In a few years time the UK will see cash withdrawals starting to go down and cards and other means of electronic payment taking over most of the daily payment needs. But cash will still be there because it has its unique selling point: Anonymous and unaccountable. These features are appreciated by people who never joined the IRS and people that believe that Mr Obama starts each day by checking all the payments I made yesterday.  

Melvin Haskins
Melvin Haskins - Haston International Limited - 02 March, 2016, 07:522 likes 2 likes

I note that the three comments to date are all anti-cash and doomsayers for the future of cash. However, the whole point of the article is that cash is here to stay for the long haul, no matter what these doomsayers would like to happen. Life on the streets is not heading towards the utopian cashless society at any time in the foreseeable future. In fact, the article points out that very little headway is being made to replace that grubby, anonymous and unaccountable payment method.

A Finextra member
A Finextra member 02 March, 2016, 13:421 like 1 like

You could not be more wrong Melvin.

James Cranfield
James Cranfield - Insight Consultancy UK Ltd - Madrid 02 March, 2016, 17:15Be the first to give this comment the thumbs up 0 likes

Melvin - I suppose it depends on how much you can foresee in the future.  I can foresee a future without cash therefore it is in my foreseeable future.  I note that you can´t foresee this future.  The more interesting debate is when that future might come and I suspect it will not happen in the next 2 decades, and in some markets it may take until the end of this century, but foreseeable nonetheless.

And I wouldn´t necesarily conclude that very little headway is being made. Payment card purchases grew 10.9% in the same period as the 2% growth in cash withdrawals and I suspect that cash will begin to decline as new categories and payment channels open up.

Melvin Haskins
Melvin Haskins - Haston International Limited - 02 March, 2016, 17:28Be the first to give this comment the thumbs up 0 likes

Cash remains an integral part of the UK payment methodology. It also remains an integral part of society in the US and Germany, two of the world's major economies. The writer of the article is indicates that a cashless utopia is a lot further away than people think. I agree.

James Cranfield
James Cranfield - Insight Consultancy UK Ltd - Madrid 02 March, 2016, 17:51Be the first to give this comment the thumbs up 0 likes

I don´t think the writer knows what people think about the timing of the ultimate irradication of cash.  I think most people are realistic and realise that it is not around the corner but I very much doubt that anyone could imagine folding paper money still being around in the year 2100, for example.  In my opinion, people who say "cash is here to stay" have very little vision.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 02 March, 2016, 19:15Be the first to give this comment the thumbs up 0 likes

I wonder if the commenter means "eradication of cash" or "irradiation of cash"? Vision is a great thing to have. It helps people muse "Where did it all go wrong?" when reality strikes hard. IMO, the war on cash is failing because it's fought with the weapons sold by self-serving middlemen e.g. FIs who stand to gain fees / data when electronic payment methods are used.

The more pragmatic way to win the war on cash is to acknowledge the imperatives of payers and payees, the two important stakeholders of a transaction, recognize how cash fulfills their needs (e.g. cash is still the ONLY realtime retail payment method that makes funds available to spend for the payee and without dependency on any third party), and devise an alternative that does as well as better than cash and at no higher cost than cash. Any visionaries out there? I thought so, too. To paraphrase Biggles / Thick As A Brick, you won't find any visionaries when you need them for the last transaction.

James Cranfield
James Cranfield - Insight Consultancy UK Ltd - Madrid 02 March, 2016, 19:55Be the first to give this comment the thumbs up 0 likes

I wonder if the commenter means " well as or better than cash..."?


I suppose this all depends on what exposure you have to evolving payments in your market today.  Last week I paid for my round at the pub with my watch.  The waiter simply walked up and I put the watch on the terminal and that was that.  No delay, no friction, no change, and my funds were in the account earning (little) interest right up until the time of payment rather than from when it was withdawn from an ATM.

Not sure what is happening with interchange in your market, but the lowering of interchange in Europe is making that alternative you speak of a reality.  Low or zero interchange could do more for the war on cash than contactless is doing.

The fact is we are all guessing.  I think it is a fascinating debate and the great thing is that none of us will be around to prove anyone wrong in 2100!


A Finextra member
A Finextra member 03 March, 2016, 01:223 likes 3 likes The newest potential advantage that people are saying about a cashless society is that it is a way of controlling capital flows from one state to another, or effectively stymying the loss or flight of cash from one country to another. I understand that there is the question before the Europian Union & the United States to permanently retire the top cash denominations in each jurisdiction. The 500 Euro & the $100 USD bills. These policies have their origin in research from the US Treasury by some high ranking public servant whose name escapes me. The purpose of retiring these denominations are to combat organised crime ie drug dealers etc. by making their life around the use of cash as difficult as possible. Let's assume for a moment that the entire world at let us say the year 2100 or even further down the track. One advantage that comes to my mind that I haven't heard a comment anywhere is where you have nefarious individuals that operate a people smuggling operation may find their criminal operation significantly disrupted without access to cold hard cash. It is the prospect of a multitude of advantages, political, economic, social, criminological, as well as that most important exchange between buyers & sellers that eventually see the end of cash. This will not happen tomorrow of course and it will be buyers and sellers who will finally authorise this change much like the situation of Sweden & Denmark. Smart governments will never force the issue but stay in the background and wait for the inevitable force of technological & generational change to take effect. I am hoping that I will see that day arrive during my lifetime in my own country of Australia as well as in others.
Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 03 March, 2016, 17:48Be the first to give this comment the thumbs up 0 likes

When the credit card "no surcharge" rule was repealed, some merchants started charging as much as 7.5% surcharge even though their MSC / MDF cost was only 2-2.5%. Therefore, while I'm aware that interchange is being lowered in Europe, I'm not so sure if that will mean much in actual practice. In any case, credit card still won't make funds available to spend in real time, the way cash does.