It appears 2016 could be the year of paradoxes. As we just covered, Samsung and MasterCard are using their considerable tech powers this year to put payments not into our hands with mobile phones and wearables, but into our houses with TVs and fridges.
It seems odd that for years companies have been scrambling to make portable devices that can do everything from transferring payments to tracking how many calories you burnt whilst making those payment, but now have seemingly used all the knowledge and technological advancements to make payments immovable again by sticking it on to a fridge.
The answer to this of course is that it’s not a regression, having smart fridges and TVs was obviously the next logical step in a decade that will undoubtedly be the age of the Internet of Things. It makes sense to have payment facilities that reflect geographically very specifically what you are purchasing.
Moreover, it seems that, as a society, we are quite happy to keep payments affixed to immovable objects. According to new data from research firm RBR, global ATM cash withdrawal volumes grew by 7 per cent in 2014 with a total of 92 billion withdrawals made. That figure is predicted to jump to 104 billion withdrawals at the end of this year, and 128 billion by 2020.
Herein lies the paradox: in an age when not only we have contactless cards that are consistently becoming more and more popular around the world – and have actually pushed digital payments to overtake cash payments for the first time last year – but also fridges that process payments and learn your shopping patterns, how can ATM withdrawals, and ergo cash, still be so popular? How can cash withdrawals still be increasing when in China, in one day 94 million people spent $9.8 billion dollars via mobile phones alone and in one month in the UK we spent just under a billion pounds on contactless cards alone?
One suggestion is that technology is incremental not deleterious to older technology. After all, credit cards did not wipe out cash, they just added to the payment experience. In fact, as the ATM literally demonstrates: you can use the newer payment device to convert money into its older form.
However, cards not exterminating cash is pretty much the only example you can use, because every other payment method is either an addition to the credit card (Chip-and-PIN/contactless) or too nascent to count as a serious rival yet (mobile technology/bitcoin). Furthermore, the rise of the recent innovations has all but wiped off the use of cheques, showing that actually, adoption of new technologies on a mass scale isn’t as polite or staggered as people believe.
And yet, just as the Bank of England said last year, cash will be “resilient” is unlikely to become extinct in the near future.
An acceptable answer is simply that, on a global scale, digital technology has nothing on cash.
“Growth in ATM withdrawals was strongest in the Asia-Pacific and Middle East and Africa regions – in many developing markets ATM usage is growing at a far greater pace than ATM deployment. Both Bangladesh and Vietnam saw annual withdrawal volumes rise by a quarter – driven by increasing numbers of cards being issued to their large unbanked populations – although these countries’ installed bases only grew by 11 per cent and 4 per cent respectively,” RBR noted.
In China, deployment exceeded growth in ATM withdrawal volumes. RBR said that, to serve the huge number of people entering the banking system, Chinese banks added 95,000 ATMs in 2014. This marks an 18 per cent increase in the installed base compared to just 10 per cent growth in withdrawal volumes. RBR forecasts that deployment by Chinese banks will slow as the market matures, and ATM usage should surpass deployment again.
RBR did note that in more mature markets, i.e. ones that had sound digital payment infrastructures the ATM usage levels were stagnating and even declining, but “all regions except North America saw growth in the total volume of withdrawals”.
In this guest post, Anthony Walton, CEO of Iliad Solutions, explores how businesses and regulators can increase the safety and efficiency of transactions, and introduce technological advances into the system.
Payment terminals have stayed the same over the last 10 years, with steady advances in contactless and mobile wallet transactions. Retailers and brands are making a conscious effort to get closer to consumers.