Cash crawls back

Good old cash may be staging the beginnings of a comeback in the face of the surge in digital payments due to the pandemic, depending on the nostalgia and preferences of consumers as lockdown rules ease.

In New Zealand at least, use of cash – in the sense of demand for banknotes from ATMs – is “bouncing back strongly, albeit based on low numbers” from the New Zealand arm of Next Payments, Tim Wildash, Next’s CEO told Banking Day.

Health concerns around the chance that banknotes may be a means of passing on coronavirus has led to “card only” policies at many merchants, though the likes of The Mint and WHO have said that banknotes and coins “have the same chance of transmitting COVID-19 as many other surfaces including bank cards used to tap and go”.

“Cash poses no greater risk than other forms of payment or many other dry surfaces,” the Mint said last month.

Demand for cash withdrawals from ATMs has experienced a long, secular decline and was down by seven per cent to A$124 billion over the year to March 2020, analysis by consultant Grant Halverson of RBA payments data shows.

Over the month of March, ATM use was down 16 per cent.

Over the last year debit card use was up 10 per cent and the recent bank reporting season confirms a shift to digital payments is well underway.

Use of the “cash-out” option on Eftpos and scheme debit cards fell only 4 per cent during March, on Halverson’s analysis, though cash-out volumes were down 21 per cent compared with one year earlier, further confirming the shift in consumer preference to mobile payments.

Independent operators of ATMs such as Next and Cardtronics and Linfox’s Armaguard (via RediATM) and a decreasing tail of small suppliers of ATM services are especially exposed to the pubs, clubs and hospitality sector, and thus pinning their hopes on the mass market’s willingness to embrace many old habits, including paying a service fee of around $2.90 (at least at Next ATMs).