Dash for Cash

The promise of a cashless society reminds us of the fallacy of a paperless office. The more we hear about it the further from reality it strays. Although we have to admit that MMPI’s offices look impressive following a recent unrepentant cull of everything paper. But we acknowledge that it’s only a matter of time before the menace returns.

When regulators talk of a cashless society they envisage a time when consumers will no longer use notes and coins. Whatever promotional push the authorities are deploying – it’s not working. Far from becoming cashless; society’s use of cash is growing. In Europe the volume of notes and coins in circulation has increased by the order of 13% per annum over the past 15 years. There are similar stories in the US, Japan and elsewhere.

A recent study “European Cash Report” by the Association of Corporate Treasurers is very revealing in both its findings and its glaring omissions. First of all, it found that the cash supply chain is very fragmented across Europe. The continual use of cash in everyday transactions is highly inefficient with the cash being handled and counted multiple times as it transfers between parties in the transaction cycle.

There is evidence that older consumers prefer the touch and feel of cash (but not the weight of coins) while the 20 somethings use plastic all the time. The report highlights the illogical behaviour of many who use plastic to withdraw cash, use the cash until it runs out and then repeat the process ad nauseam. How many readers fall into that category?

The percentage breakdown of transactions in cash across Europe is interesting.

Luxembourg 29 Finland 36 Denmark 37
Netherlands 37 Sweden 38 Estonia 44
France 44 United Kingdom 45 Austria 53
Belgium 54 Portugal 58 EU average 60
Germany 61 Slovenia 64 Latvia 68
Ireland 69 Hungary 73 Spain 74
Slovakia 76 Czech Republic 77 Cyprus 77
Poland 80 Lithuania 80 Malta 82
Italy 86 Romania 93 Bulgaria 95
Greece 97 USA 53 Japan 58

Source: ACT 2016

The figures confirm that 40% of all payments throughout the EU are made by plastic, electronic and digital transfers. This tallies with empirical evidence in Ireland where credit cards are used extensively for larger purchases and most businesses settle invoices by EFT or direct debit.

What MMPI found intriguing about the report was that it failed to grapple with the question as to why cash has such an enduring popularity! It didn’t dare hint at the black economy; privacy/secrecy, tax avoidance, terrorist financing or money-laundering – almost all of which takes place through the medium of cash. A quick look at the countries on the list with the highest percentage use of cash suggests that some or all of these behaviours might be present.

The report considers Sweden the most cash-free country. Public transport is 100% cashless and 5 of Sweden’s largest banks do not distribute cash. Wasn’t it the Swedish group Abba that intoned “Money. Money, Money!”