A big recent report from German powerhouse Deutsche Bank turns some conventional thinking on its head.
Cash is here to stay but plastic credit and debit cards are set to disappear – and disappear soon.
The survey of 3,600 people across Europe, the USA and Asia finds “cash will stay” but digital payments will lead to “the extinction of the plastic card.”
Deutsche Bank Research’s Marion Laboure, Ph.D and Jim Reid wrote :
Cash has properties that no other payment method has. It helps users remain anonymous and avoids cyberattacks
However, these benefits are not why most of the 3,600 people surveyed prefer cash. The number one reason (over 40 percent) people like cash is easier budgeting and fast payments.
Cash is convenient, accepted almost everywhere, and secure say the researchers. For the rich and wealthy, cash has become buffer in uncertain times.
“Over centuries, people have developed a deep-rooted trust in paper and coins during uncertain times.
“The trade war between the US and China has led notable investors to increase their cash holdings.
The Reserve Bank of Australia has also noticed an increase in cash holdings by investors during COVID-19.
The value of cash on issue is surging and is on track to break $100 billion of notes of issue soon.
The Reserve Bank of Australia is reporting a continuing surge in new bank notes being issued and withdrawn by Australians during COVID-19.
Last week ending 5 August, $611 million in new Australian bank notes were issued by the RBA. $1.38 billion was issued in the last week of July 2020.
Around half a billion dollars per week is being withdrawn as cash by Australians since late March. The amount of cash in circulation or being hoarded will soon break $100 billion for the first time ever.
Since the second half of March, cash on issue has surged up more than 10 per cent from less than $84 billion to more than $94 billion.
“The death of cash has been exaggerated,” said Tim Wildash, CEO of Next Payments, Australia’s and New Zealand’s biggest independent ATM network.
“Aussies and New Zealanders are voting for cash, at this rate, Australia will have issued $100 billion in cash before Christmas. Our own data shows that cash withdrawals are bouncing back after social restrictions ease. In Australian states post-lockdown and in New Zealand we are seeing people come back to cash in droves.
“Meanwhile Deutsche Bank and other are predicting the death of plastic cards this decade, which may surprise some.”
Diital wallets will see plastic cards move onto people’s phones and other devices. The insecurity of plastic credit and debit cards is also a huge concern
Yesterday two more police reports from Melbourne’s South East – Kew and Frankston - have added to the deluge of warnings and public posts from police about contactless card fraud and the $200 limit for no-PIN transactions.
“The $200 limit has led to people’s cars being broken into, handbags stolen and criminals running rampant in our streets, suburbs and shops,” said Tim Wildash, Chief Executive Officer of Next Payments, Australia’s leading independent ATM network.
“Cards are dirtier than cash, less private and less secure.”
Cash will be a part of the economy for decades to come said the Deutsche Bank research which cited previous predictions about the death of cash:
1968: “As a result of the proliferation of credit cards, there has been widespread speculation about the possibilities of a checkless, cashless society in the future.” Jack Lefler, 24 July 1968: Las Cruces Sun-News, NM, USA.
1970s: Citibank leader writes: “Cashless Society Is Predicted by Credit Card Use.”
1981: “World of Tomorrow: School, Work and Play, Neil Ardley said, by 2002, “you do not carry any money on you and neither does anyone else. You pay for everything you buy with an identity card like a credit card. It has a magnetic strip containing your name and other personal information.”
February 2007, The Economist cover title: “The End of the Cash Era.” – cash is a dinosaur doomed to extinction.
2016: Larry Summers “It’s time to kill the $100 bill.”
We could also add these recent announcements regarding the death of cash:
July 2020: PayPal predicts death of cash: “PayPal executives said society has reached an "inflection point" when it comes to the "death of cash,"
August 2020: Washington Post: “Will the pandemic finally kill cash?”:
August 2020: Fox News TV: Does coronavirus mark the death of cash? “No cash will be around for a long time…”
Despite the resilience of cash and the continuing support cash enjoys among consumers and merchants, there are powerful forces who do not support cash.
“Governments, banks, and card providers share at least one common goal: the elimination of cash,” said the Deutsche Bank researchers.
Governments want to eliminate large cash notes and banks and card companies are targeting small payments with contactless cards and mobile payments said Deutsche.
“Thus, the global campaign against paper money is lively.”
Despite this campaign, ordinary people are voting for cash.
“A third of people in developed countries consider cash to be their favourite payment method and more than half believe cash will always be around,” said the Deutsche Bank study, “This statement was true regardless of country, gender, and age.”
Today, the 12th of January 2022, new data has been released by the Reserve Bank of Australia showing cash withdrawals are trending UP in Australia.
COVID-19 led to an immediate scare and fear of virus transmission via surfaces.