Is The UK Turning The Corner?
According to the Bank of England there is over £52 billion in cash circulating in the UK economy today. That’s enough to buy 232,000 homes all over the country or the Lloyds Banking Group, at today’s prices. Yet as many of us know, the use of paper cash and coinage is in decline. According to the payments council, the amount of cash withdrawn from ATMs between April and June 2010 was £1.6 billion – a decline of 3.2 per cent on the same period last year. In contrast, debit card usage rose £7.9 billion year over year, up 12.4 per cent.
In essence, the figures show that electronic payments are taking a growing share of the total number of transactions, despite cash's traditional attractions to consumers in times of economic hardship. Cash may be a tangible and reassuring indicator of wealth and security, but it seems that the UK has finally turned a corner – the man on the street no longer affords cash the special reverence it once had.
Now it seems people are shunning the ATM. Instead of withdrawing cash to spend in a retailer, they are now finding it more convenient to use their cards to pay. This is good news for the economy because cash costs. Last week, the Irish estimated that it costs the country €1bn a year in handling, printing, storing and security among other reasons. And across Europe, the average cost of cash is estimated to be €130 per person.
The statistics are also promising for the electronic payments industry, and if they continue in the same direction, the demise of cash may be closer than we think.
As I head for the EFMA Cards & Payments 2010 event in Paris this week, I look forward to hearing what the banks, PSPs, technology providers and even the regulators are planning in order to consolidate and accelerate these encouraging trends.
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