Study: Payments Innovation and the Use of Cash
A new study concludes that although payments innovations will reduce consumers' use of cash in time, new modes of payment will not show a significant impact on cash for at least a decade. The findings come from the research paper, "Payments Innovation and the Use of Cash: Will Cash Really Die — and if so, When?, which was sponsored by Loomis AB and presented by Market Platform Dynamics.
"Cash isn't going to die — or not at least any time soon — in spite of the explosive growth of electronic payments, in spite of the bullseye that it has on its back from players who want to see it dead and buried, and in spite of the convincing narrative that electronic payments pundits deliver, " said MPD CEO Karen Webster in a presentation of the paper to the ESTA World Congress in Marseilles, France.
Webster said that existing methods of measuring cash fail to explain how consumers actually use it. She said that the study used a new methodology that offers a much more accurate understanding of "how much cash is used by consumers to pay for things at merchants in different countries over time."
The study examined 10 markets — France, Germany, Italy, Poland, Portugal, Spain, Sweden, Turkey, the U.K. and the U.S. — to calculate the growth or decline of cash through the next decade. In all but one market, Sweden, where consumer spending in cash is expected to decline, the study forecast an increase in total cash use.
"It's easy to lose perspective about the relevance of cash in society given the wave of news reports on payments innovation," said Lars Blecko, CEO of Loomis and ESTA conference chairman. He said the study's "more robust methodology" yielded results that can benefit of the entire cash ecosystem.
"It turns perceptions about cash into a set of tangible and actionable metrics that help the industry understand how cash will evolve alongside mobile and the other payments innovations that will certainly come our way over the years," he said.
Both the 16-page report and a technical paper discussing study methodology and conclusions are available for free download.
Read more about trends and statistics.