Cards or cash in 2012?

These considerations were part of Visa public announcements about the launch of Visa contactless in the UK (cf. Smart Insights #06-48). They faced a strong opposition demonstrating the British would be very reluctant to abandon cash altogether. APACS (Association for Payments Clearing Services), the UK payment association, conducted a research covering the relation of consumers with cash. It demonstrates, cash still accounts for 63% of all day-to-day financial transactions in the UK. Moreover, over 96% of payments under GBP 5 (EUR 7.30) are made in cash. Cash is king in retail, buses, pubs and clubs, and restaurants as well as takeaways.

The situation may be evolving: 2004 was the first year when card payments represented more value than cash.

However, APACS also mentioned, this may change with the arrival of contactless cards that will be simple and quicker to uses for small payments than current Chip-and-PIN cards. The Londoners, have a first hand experience of the convenience of contactless payment thanks to the Oyster card used to pay for London tube, buses, and now trains (cf. Smart Insights #07-02).

Some merchants, from the British Retail Consortium, jumped on the opportunity to complain about high interchange fees, and the de facto duopoly between MasterCard and Visa, something Peter Ayliffe dismissed promptly. Visa is still under scrutiny by the European Commissioner for Competition about interchange fees.

Between Sandra Quinn, director of communication at APACS who said "The likelihood of Britain becoming a cashless society in the foreseeable future to be similar to us all working in paperless offices. We have been using notes in Britain for over 300 years and we expect that we will continue to do so in significant amounts for a long time to come.", and Peter Ayliffe who dreams of a cashless society, who 's going to win?

Thierry Spanjaard
Chief Editor
Smart Insights