Cash Remains King, Despite Cashless Initiatives
By Matt Pillar, editor in chief
Last month, Citi, the Ford and Gates Foundations, the Omidyar Network, Visa, UNCDF, and USAID collaborated to create the Better Than Cash Alliance, an effort to promote the transition of the economic lives of the world's poor from cash to electronic.
Nigeria is being pushed toward a cashless society by its National Bank. In underdeveloped countries and for provision of government benefits to the poor, cashless payment and consumerism means higher security, more accountability, and less cost (for the benefit administrators).
The assault on cash took another big leap in China last month, when the country announced the approval of the global NFC (near field communication) standard for cashless payments.
But in Australia, the U.K., and the U.S., there’s plenty of evidence that a cashless future, where consumers rely on electronic devices to handle their banking and buying, may be further down the road than government agencies and financial institutions would like.
Consumers in Australia haven’t accepted mobile banking, evidenced by recent data from the Reserve Bank of Australia. There, consumer cash holdings grew 7% in the past year. A full 91% of that cash in circulation and 65% of the cash in tills, wallets, and storage is in the form of $50 and $100 notes. That’s indicative that cash usage there is more than a few-dollars-in-the-wallet phenomenon; Australians are saving and buying with cash.
In the U.K., one of the world’s heaviest users of electronic payments, ATM withdrawals were up 7% last year.
Here in the States, the two largest growth segments in the population—millenials and Hispanics—are more likely to use cash than other demographic segments. Generation Y uses cash more today than it did two years ago. And while research from Aite Group indicates a 4% annual drop in cash usage through 2015, consumers’ cash transactions will still account for more than $1 trillion in that year.
Yes, electronic payments are growing faster (MasterCard' global electronic transaction volume grew by 16.3% in 2011), but steady cash usage isn’t expected to wane as fast as it was once anticipated to.
What does all this mean for your mobile POS initiative? Don’t except cash drawers and safes from your POS budget just yet.