News & Views - Savantor

The Resilience of Cash

Monday, 15 October 2007

If cash is still king with the customers according to BRC research then what does this say about the investment by the banks and schemes in selling contactless cards to an unsuspecting public?  Will the cashless society be like the paperless office in being more talked about than acted on?  Probably not but cash isn't taking it lying down.  A quick look at the latest research figures shows that notes and coin payments accounted for more than half (54%) of all transactions last year, with £32 of every £100 spent in shops being in cash.  More free to use ATMs are being installed and according to APACS, adults in the North West visit cash machines more regularly than anywhere else in the UK and withdraw more – on average a total of £5,355 each year.

BRC also points out that on average a £20 cash transaction costs a retailer less than four pence while a £20 credit card transaction costs at least 17 pence, says the BRC. Whilst this may be over simplifying the case when you take into account the cost of sorting, balancing, security, potential for fraud and transporting it to the bank etc still probably begs the question if contactless is really replacing cash then it should cost retailers the same or less to process or why would they bother?  Collecting all payments, including cash, cards and cheques, cost retailers £317 million last year, says the BRC. Processing of credit card payments made up 51% of that even though they represent only 22% of sales turnover and 12% of transactions.

Meanwhile Contactless payment cards continue to roll out in London, we have more Pre paid card like Eros for newspapers and there is an NFC trail to take place at Manchester City FC.  Research from Juniper predicts that around 52 million people will use their mobile phones as a contactless payments devise to buy goods and services by 2011.

While it use may be declining, cash will not go away entirely. Not all members of society have access to card products whilst others chose not to use cards.  Unless this changes, cash is here for a while yet. So it may be more accurate to say the future is less cash rather than cashless.

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