What's This Year's Biggest Payment Innovation? Cash


[Editor's Note: The article below originally appeared in Global Banking and Finance Review on September 16, 2016] 

The Bank of England has just brought one of the biggest payment innovations in 2016 to the market. And it doesn’t involve your phone. It’s the new polymer banknote. 


In the race for technological improvement, cash is sometimes overlooked, or worse yet, dismissed. However, in a world where the options of paying for your coffee in a fashionable way seem to be endless, cash is the solid constant.

With a polymer £5 note now in circulation, a polymer £10 note arriving next year, and a polymer £20 note set to be in our pockets before 2020, the Bank of England clearly plans for a future with durable and ever-present cash – quite firmly contradicting all of the headlines that predict the end of cash almost on a daily basis.

Such doom and gloom predictions miss the longevity and usefulness of cash as a payment method. You might have used your Smart Watch once or twice to pay for your lunch at Pret, but would you really go on a full night out just wearing your Smart Watch while leaving your wallet at home? The really universal payment method is cash – and the most mobile wallet is the one made of leather that you carry in your pocket.

By 2020, we will probably have read numerous press releases announcing new ‘disruptions’ in the payments landscape, but we will have actually seen an overall cash growth of 3.9% in the UK, according to the Global Cash Index™ by PYMNTS.com. This is because, as the overall payments universe is growing, cash is growing with it.

This does not in any way mean that card and mobile payments have not become an integral part of our everyday lives. Of course they have. But the different payment methods actually go quite well together – and contactless and mobile payments can just as easily replace each other, and traditional debit cards, as they could replace cash.

ATM growth alongside cash growth

Another indicator of consumers and financial institutions alike adapting to a new payment landscape where cash continues to play an integral role, is the continual rise of ATM deployments.

Even as bank branches close up and down the country, Britain has more cash machines than ever before: a staggering 70,270 ATMs in 2015 according to Payments UK. This number is up 1.3% from 2014 and is mainly driven by independent cash machine operators such as Cardtronics.

This rise in ATMs may seem counter-intuitive at first, as mobile banking is predicted to increase by a massive 161% over the five years from 2015 to 2020, according to the British Bankers’ Association. However, when we look at the nuances of consumer finance, the development is actually quite straightforward.

Whereas many banking services are indeed best delivered via a mobile, cash access still requires a physical presence in local communities. And as cash remains so popular among consumers, what people want is to use their mobile for one set of banking services, while still being able to withdraw cash in their own neighbourhoods.

The division of labour is therefore increasingly evolving towards banks improving their mobile offering while at the same time working with independent ATM operators to deliver cash access. Cardtronics has already partnered this way with banks and installed new cash machines in towns and villages nationwide, from Glastonbury in Somerset to Howden in Yorkshire.

All of these developments resulted in Brits using bank-owned and independent cash machines to withdraw money as many as 2.8 billion times in 2015, 2.6% more times than in 2014. The total amount of cash withdrawn was an incredible £194 billion. This means that every day in 2015, the average UK ATM dispensed about £100 more than the year before.

And for independent ATM operators alone, the numbers are even more impressive. If we look at cash withdrawals from independents only, the increase is a gigantic 43% from 2014 to 2015. This is the fastest annual increase ever and also an indication that the trend for independent ATMs has really cemented itself as a vital part of UK banking.

For local businesses, this increase in cash machines is particularly welcome. Independent research published by Cardtronics found that on average £16.30 from each cash machine withdrawal goes straight back into local shops near to the cash point.

With the new polymer bank notes, then, consumers and local businesses will continue to reap the benefits of cash access in years and decades to come – with even more durable notes than before. And if anyone suggests that cash will be replaced by other payment methods, let the Bank of England give them its answer.

Tim Halford 
Managing Director - Cardtronics UK & Ireland

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