[Be it Western or Eastern Europe, when it comes to paying for daily transactions, consumers still pick cash - $3.6 trillion of the cold, hard stuff was spent in 2016, according to the latest PYMNTS.com Global Cash Index™ Western and Eastern Europe Analysis. But with digital and contactless payments making in-roads, will cash survive? ATMIA Europe Executive Director Ron Delnevo says cash will persevere – with some growing pains – much like the brick-and-mortar stores in the age of internet retailing. The following is a reprint
of the October 12, 2017 article on
the interview with Delnevo.]
Despite the growing availability of and interest in digital
and contactless payments, when it comes to consumer preference, cash continues
to be the ultimate show stopper.
Nearly 75 percent of point-of-sale transactions in the
European Union (EU) today are paid using cash, according to a recent European
Central Bank study, which surveyed more than 65,000 consumers in 17
countries. While there is an overall increase in circulation of cash, each of
the member states in the EU has a varying affinity for it.
PYMNTS recently caught up with Ron Delnevo, director of the
ATM Industry Association (ATMIA), to discuss European cash use and touch upon
some of the emerging payment trends in the U.K. – many of which may prove to be
the bellwether for use of differing payment methods across Europe.
While cash may be losing some of its share in certain
markets, Delnevo said, overall use of cash in Europe is continuing to increase
at a healthy rate, and will likely be in the driver’s seat for years to come.
Cash and Its Changing Accessibility
With growth in online banking in the EU, foot traffic to
bank branches has steadily declined over the last few years.
Some 9,100 bank branches were shuttered in 2016 alone, a 4.6
percent decline on the previous year, according to the European
Banking Federation. And, with that, access to cash-dispensing ATMs has
steadily decreased as well.
Additionally, the number of ATMs installed across Europe has
reportedly been declining by 6 percent every year since 2010.
“This is starting to cause problems – not so much for the
accessibility and withdrawal of cash, but certainly [for] the ability to
deposit cash,” Delnevo said, adding that consumers in smaller towns must
increasingly make long trips to deposit cash.
“Catterick, Yorkshire, for example, is a town of nearly
3,000 inhabitants, a race course, an army barracks, shops and swans, [but has]
no bank branch or post office,” he said. “So, if you want to deposit cash, you
have to go to Richmond, a few miles away, to find an ATM that accepts cash.”
While the shift toward digital banking has contributed to a
decline in bank branches and ATM machines, it hasn’t made a severe impact on
use of cash. With the closure of bank ATMs, third-party ATM companies are
quickly expanding their footprints to fill the void, Delnevo added.
Banks often take a conservative position when it comes to
cash and have a mindset that cash and ATMs aren’t going to be around for too
long, he explained, so why should those financial institutions feel compelled
to invest much money?
Instead of hoping for consumers’ need for cash to go away,
though, banks must understand market demand and focus on developing innovative
ATMs that not only recycle cash, but also hold the potential for replacing bank
branches, Delnevo said.
Cash’s Fight with Contactless Payments
Contactless payments have come a long way since their U.K. introduction 10 years ago. Today, in fact, U.K. consumers can tap-and-go to board the London Underground and spend up to £30 via contactless payments. With that, overall use of contactless payments has quickly skyrocketed.
By the end of 2016, nearly 27 percent of card-based payments
were contactless, a 15 percent increase from the year before, according to the UK
And, while contactless payments seem to have taken a
sizeable bite out of chip- and PIN-based transactions, they are still an
underdog when compared to cash – at least in the retail setting.
Nearly 76 percent of transactions made at approximately
50,000 convenience store locations in the U.K. are still made using cash, according
to a 2017 report by the Association of
“That’s despite the fact that we have [had] contactless in
the U.K. longer than any other European country, but cash is still something
that many people trust,” Delnevo said. In addition, most mom-and-pop stores in
the U.K. are contactless-enabled.
Although Delnevo foresees an increase in the use of contactless payments, even at such mom-and-pop stores, he believes it’s unlikely to gain significant traction in the near future, even if the £30 limit were to be increased to a £100. If anything, he sees an increase in the limit as a possible deterrent in contactless payments growth.
“Contactless wasn’t invented for £100 transactions,” Delnevo said. “Making that too high would have big security implications. Increasing it to £100 makes it very worthwhile to steal someone’s card for seven or 10 transactions. All of [a] sudden, that’s not minor theft anymore.”
That stands true for any country in the European Union,
Growth in Circulation
Despite the ever-growing competition, overall use of cash keeps increasing. In 2016, the U.K.’s overall use of cash hit £70 billion, an increase of 10 percent, marking its fastest growth in a decade, according to the Bank
Meanwhile, cash’s circulation in Western European countries
continues to remain very high, especially in Austria, Germany, Italy, Slovakia,
Spain and Portugal, Delnevo pointed out. In fact, even among countries that
have seen cash use decrease, there’s little interest in steering away from it
“I have met with central banks in Sweden, Denmark and Norway
– [none] want to go cashless,” Delnevo said. “They see advantages with cash as
a financially inclusive medium, as an educational medium and as a store of value.”
Ultimately, as alternate payment options see growth in
usage, consumers are bound to adopt a variety of payment methods.
“You don’t want too much centralized power,” Delnevo
explained. “Let’s have payment choices: WePay, Alipay, Apple Pay, Samsung Pay –
we need choices, and there’s still room for all of them.”
Delnevo sees growth of payment methods much the same as the
evolution of the modern transportation system. Consumers can pick and choose
between walking, flying, boating or riding a train, among other options, and
all options can coexist.
“That’s the way it should be in payments,” he said. “It’s
too important to become thin and narrow.”
And, with cash sharing its place with other payment methods,
it seems consumers and small businesses remain far from the idea of trading it
in for digital payment methods.
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