With tech companies across the globe continuing to spend millions on getting the public to ditch cash in favour of cards and mobile devices, it is easy to suggest that the future of payments lies well away from physical money. In fact, the prediction of a cashless society is far from new, but only recently we have seen significant steps towards this.
Towards the end of 2016, we saw India ban large denomination notes – with some South American countries starting to do the same – and the withdrawal of the 500 Euro note. In Sweden, central Stockholm and Gothenburg are close to being cash-free zones. According to Riksbank, the central bank of Sweden, just 2 % of the value of all transactions across Sweden were cash purchases. This is expected to drop to less than 1 % by 2020. In shops, cash is now used for just 20 % of transactions, while the global average stands at 75 %. Despite the fact that governments and FIs across the globe are looking at the ‘Swedish model’ for reasons of fraud prevention, security and convenience, cash remains immensely popular with the people that really count: the public.
In the rural north of Sweden, the older residents openly resent Stockholm and Gothenburg for neglecting the ‘cash loyalists’, resulting in campaigns to ensure older Swedes are still able to deposit and withdraw at banks.
Elsewhere, in 2014, the London bus network went completely cashless, while the underground started providing a contactless option at a cheaper rate to cash. The reaction to this was mixed to say the least – an estimated 2,000 people were left stranded at the start of the cashless bus network scheme due to stolen, lost or faulty Oyster cards alone. This does not take into account tourists or people from outside the capital who may have been unaware of the changes and tried to board unsuccessfully with cash.
Furthermore, while contactless and card payments are on the uptick in the UK, PYMNTS Global Cash Index report suggests that not only are cash payments still more common than their digital counterparts, but their volume is predicted to grow between now and 2020.
Admittedly, this is generally for lower value transactions than with cards (GBP 216.1 billion compared to GBP 490 billion in total in 2015, respectively) but it proves that cash still has a role to play today, even in a part of the world which is considered financially and technologically advanced. In 2016, the Bank of England introduced polymer GBP 5 notes lasting 2.5 times longer than its cotton predecessor, to support UK’s confidence in cash.
Therefore we should look at cash not as the enemy, but as a constant that we can modernise alongside.
About Darren Busby
Darren Busby is Associate Vice President and Business Development Director, Europe at Compass Plus and has joined the company in 2015. He started his career in 1998 at Interlink Funds Switching Technologies who were acquired by CR2, which saw Darren take on the role of Sales Support Manager.
Between 2001 and 2005, Darren was employed as Head of Pre-Sales by S2 Systems, who were subsequently acquired by ACI, where he then held the position of Account Manager with responsibility for the Nordic region until 2010. Darren also worked at FIS until 2012 and thereafter at Sopra Banking Software as a New Business Sales Manager.
About Compass Plus
Compass Plus provides comprehensive, fully integrated and flexible payments software and services that help financial institutions and payment service providers meet rapidly changing market demands. Our diverse customer base spans retail banks, processing centres, national switches and personalisation centres in countries across Europe, Asia, Africa, the Middle East, North and South America. With more than 25 years’ experience, Compass Plus helps build and manage all-scale electronic payment systems that generate new revenues and improve profits for its customers.
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