UK: War on Cash who is winning

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We have just seen published two great pieces of data:

Cash

The number of ATM machines in UK has now exceeded 70,000 for the first time. And as one might expect given that supply tried to meet demand some £11.3 billion was withdrawn from ATMs in July, marking a 4% increase compared with July 2014. We have seen 92% of UK adults used a cash machine in the past year

Contactless Growth

Contactless, the product that is meant to take away all our needs for cash has seen a 150% increase in value the last year, and 134% increase in number of transactions according to Barclays. Their research indicated that 57% of people in the UK expect to increase their use of contactless technology because of today’s rise.

The top ten ways people use their contactless cards in the UK:

• Supermarkets: 29%
• Restaurants: 20%
• Commuter transport: 18%
• Fast food outlets: 10%
• Pharmacies: 4%
• Pubs and bars: 4%
• Convenience stores: 3%
• Service stations: 3%
• Newsagents: 2%
• Caterers: 1%

We have also just seen the increase go from £20 to £30 per transaction which is meant to further drive the consumer to use contactless and could be a big boost to some of the supermarkets where for many the average basket size is over £20:

Average Basket Size

Aldi £17.92

Asda £21.69

Sainsburys £15,28

Co-op £11.60

Waitrose £28.24

Morrisons £24.61

It is thus no surprise that the Spar Group have stated that in May 2014 Spar took 55,000 contactless transactions but within three months this had quadrupled. One year on this figure has grown ten times over, representing 15.5% of all Visa Debit card payments made in its stores.

Visa Europe has estimated that the increase to £30 could affect approximately three million Visa transactions a day, for a total of over £70 million of spend. Of course they face a slight challenge in that their biggest issuer Barclays has not increased their limit, as their website states:

Why can’t I use my Barclaycard MasterCard to make contactless purchases up to £30?

It is not currently possible to increase the contactless limit on the Barclaycard MasterCard to £30, however this could change in the future. The contactless limit for Barclaycard MasterCard is staying at £20. For any payments over £20 you will be prompted to use chip and PIN.

This of course will start to nicely confuse consumers as some can spend up to £30 and some cannot, oh but it also depends on the retailer and their acquirer if they have updated to allow £30.

The War on Cash

So who is winning the war on cash, well as much as the schemes try and tell us that we are all falling in love in contactless, and as much as we are it would appear that a lot of the contactless spend is just replacing existing card transactions. And as the ATM figures prove we are still increasing the amount of cash we take out and spend. This may start to be affected with the launch of Apple Pay and other mobile wallets along with wearables such as Bpay.

This may though be hard to assess as Spar’s UK retail payments controller Roy Ford explained "Apple Pay was designed to be simply deployed alongside existing contactless payment technology so the Verifone payment terminal software sees an Apple Pay transaction simply as a "contactless" transaction." This of course means that ApplePay and soon to come Samsung and Google Pay transactions are just seen as part of the wider contactless volumes.