Surprisingly as global GDP rises, cash in circulation has still increased to meet demand. McKinsey research shows that only two out of 47 economies have decreased the amount of cash in circulation over the last few years. But cash is expensive to operate. It typically accounts for 5–10% of a bank’s entire operating costs.

What is to be done?

Bank of England research shows the position in the UK:

• £70 billion pounds worth of notes in circulation
• Which is:
  • equivalent to some £1000 per person, and
  • is around twice as much a decade ago.

Also in the UK, there are still 2.2 million people predominantly using cash and who would struggle without to access cash. Financial inclusion is a major concern in some countries, especially those with declining cash use or poor banking infrastructure.

DieboldNixdorf in their report “Reinventing cash for your future digital vision” writes that: “Research shows that 94% in Britain who give money to homeless people does so in cash. Donations of loose change are also given in cash.”

The UK Consumers Association is also worried about the removal of cash. The Bank of England and the European Central bank have been vocal in their concerns.

Technology risk

Digital payments are vulnerable to cyber-attacks, energy blackouts and network system failure and also have the potential for terrorist taking over the payment system.

For many central banks, cash is still a fundamental part of crisis planning. Without cash as a backup, a significant IT system failure could leave us without any means of accessing money.

DN concludes that “while the use of cash is in decline, maintaining a cash infrastructure can offer economic resilience and support a more robust national payment network.”

Supporting consumer choice

DN believe that:

• “The ability to cater to consumer preferences is vital in today customer-driven retail landscape, with choice an expected part of the experience stop. Certain demographics still prefer cash at hand for those with limited access to virtual means, cash is essential.
• In the UK the beloved notes are still the second most popular parametric and according to UK Finance, around 2.2 million consumers mainly use cash for the daily shopping last year, even though 9 out of 10 out of ten of them have a debit card.”

Why people still use cash:

Source & Copyright©2019 – DieboldNixdorf Access to Cash Review

Reducing the cost of cash

DN believe that “Banks management of notes and coins are archaic……… Financial institutions need to implement new technology to make cash process efficient and sustainable.”

They explain how to make cash smarter using:

• Cash recycling at the ATM
• Big data to build a comprehensive view of your cash inventory.

On the final page of the report, Sarah John, Chief Cashier, Bank of England, “We need to prepare for a world with less cash usage, without knowing exactly what part of cash will follow, and be prepared to respond effectively and sensitively as society’s payment preferences change over the next few years.”

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CTMfile take: Cutting out cash altogether will not happen for many years, if ever. Corporate treasury departments and businesses need to accept a range of payment systems INCLUDING cash. (DieboldNixdorf’s excellent report is available here.)