News

Report: Cash remains relevant

May 30, 2002

RICHMOND, England -- The proliferation of alternative currency methods, such as debit cards and paying employees through direct deposit, will not spell the end of cash in the short term according to a report by English financial research firm Retail Banking Research Ltd.

Retail Banking, as part of its report, The Global ATM Market to 2004, looked into the viability of cash as a currency method for ATMs and cash-dispensing machines such as kiosks. The report concluded that while cash use for transactions has dropped slightly, cash is still used for more than 70 percent of all purchases by private individuals.

"Whatever the conventional wisdom of a `less cash society,' the empirical evidence shows that measured in absolute and real terms, the amount of cash in circulation is stable or rising, and cash use for payments continues at a high level," the report states.

Research done by Retail Banking reveals that financial institutions -- despite the widening array of transaction methods -- may encourage the use of cash as a payment method. Retail Banking said that English banks spent an average of 8.3 pence (about 4 cents) per cash transaction during 1998 as compared to 20 pence for electronic transfers, 30 pence for card transactions, and 45 pence for checks.

The report also said the amount of cash in circulation is increasing each year in practically every country in the world, and that the value of cash in circulation has not changed significantly in recent years compared to the size of the economy.

"Given the stubborn persistence of cash, it is important both to plan for its provision to customers as efficiently as possible and to understand its long lasting appeal," the report stated. "Cash has benefits for consumers which are frequently underrated."