‘Decade of change’ in prospect for cash

A “decade of change” is in prospect for cash use across Europe according to security services group GS4, which examines cash use in 28 European countries in a newly-published report.

The report finds that the volume of cash transactions across Europe continues to increase, having previously doubled every 10 years. Concurrently the proportion of all payments made by cash has fallen, with 40% of payments across the European Union (EU) now made by card, electronic and digital payments.

Among the report’s other findings:

• The volume of cash in circulation has increased 11% per annum up to 2015 with cash now making up 60% of all payment transactions.
• Automated teller machine (ATM) withdrawals – a good indicator of cash spending, increased 14.6% between 2009 and 2014, representing an increase in value of €2.188bn (£1.75bn/US$2.49bn).
• In eight European countries, non-cash payments now make up a greater proportion of transactions than cash. Cash use as a proportion of payments is below 50% in the UK (45%), Estonia and France (both 44%), Sweden (38%), the Netherlands and Denmark (both 37%), Finland (36%) and Luxembourg (29%).

“What we are experiencing is a fundamental transition in the use of cash across Europe,” said Graham Levinsohn, G4S regional chief executive officer (CEO). “European consumers and businesses will continue to use cash as part of a multi-payment economy. But we need to modernise how they can use it.

“The cash supply chain is highly fragmented across Europe, which creates chronic inefficiency. In the most extreme cases cash could be counted up to 17 times from till to bank. However even in less extreme examples, the same cash is handled and counted multiple times as it is transferred between parties in the cash cycle. This creates an unnecessary cost burden on businesses and banks alike.

“We must work together to drive root and branch reform by streamlining and simplifying the cash cycles of Europe, creating fewer transfers between actors and consequently less duplication of effort. Significant cost efficiencies can be driven through the cash cycle so that cash remains a cost-effective payment mechanism into the future.”

Working in unison

Levinsohn added that the cash industry must work with the banking sector, central banks and policy makers to create a modern lean cash cycle. Specific challenges outlined in the report include:

• Shortening the cash cycle: reducing participants, processes, resources and funding from till to bank.
• Realising earlier value by ensuring cash value is credited earlier.
• Reducing the cost of cash by minimising handling and processing costs.
• Better interface with electronic and digital payment methods, so that cash adapts to the 21st century.

According to G4S, cards, credit transfers and direct debits account for 94% of all electronic payments in the EU’s 28 member countries. Card payments now represent the highest number of non-cash payments [45% of all non-cash payment transactions in 2014]. The total volume of non-cash payments now stands at 103.2bn transactions; averaging a 4.3% growth rate per annum since 2009.

At the same time, the volume of cash payments is increasing across EU 28 countries, with 60% of all payment transactions across Europe conducted in cash. The value for ATM withdrawals, a proxy for cash payments, rose by 14.63% between 2009 and 2014, representing a €2188m increase in the value of ATM withdrawals in Europe over the period.

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