Why do so many people still rely on cash?

For this last few years, we’ve been repeatedly told that cash is on its way out. In addition to traditional alternatives such as payment cards, new solutions such as mobile payments are leading the drive towards a more digital payments sector.

But cash is far from dead – and in many parts of the world, its popularity appears to be growing rather than fading.

Cards viewed with suspicion

In Indonesia, for example, it was recently reported that the use of cash is on the rise – and one of the key reasons for this is that people do not trust the alternatives.

Data from the country’s central bank revealed that credit card transaction values dropped by four per cent year-on-year in April – the first such decline in six years.

The reason for this is said to be new rules from the government that aim to better track the use of credit cards, by requiring providers to submit transaction details including customer and merchant identities to the tax authorities.

This is intended to make it easier for the country to clamp down on illicit activities such as corruption and tax avoidance, but it appears to have spooked many consumers, who have returned to cash due to worries about their privacy.

Germans resist efforts to limit cash

But it’s not just in emerging markets where cash is still king. Germany, for example, is one key developed economy where cash continues to reign supreme – and like in Indonesia, it seems privacy concerns are high on the list of reasons why card usage is not especially widespread.

This was highlighted by the recent backlash in plans to introduce limits on cash transactions in the country, which would ban payments of more than €5,000. Among those opposed to this proposal was Green MP Konstantin von Notz, who tweeted: “Cash allows us to remain anonymous during day-to-day transactions. In a constitutional democracy, that is a freedom that has to be defended.”

According to a recent study by Bundesbank, almost four-fifths (79 per cent) of payments in Germany are made in cash, compared with only 48 per cent in the UK, for instance. There are a range of deeply-ingrained social and cultural attitudes that are behind this, but interestingly, it seems the desire for cash extends through all demographics.

Even among 14 to 24-year-olds – usually seen as the group most likely to embrace new technology – two-thirds say they prefer paying in cash to electronic means, while a YouGov survey suggested 72 per cent of Germans said they considered it safer to pay in cash.

Other reasons for sticking to cash

Of course, privacy and security worries are not the only reasons why many continue to favour cash over methods such as credit cards. For some, being able to feel currency in their hands helps them keep control of their finances, as it’s easier to understand the impact of their spending when they are physically handing money over. Others may have concerns about relying on credit cards that attract interest, or prefer to have a payment method they are confident will be accepted anywhere.

Whatever the reasons people have for sticking with cash – or even coming back to it – it’s clear that notes and coins are not going away any time soon.

Written by Cleopatra Mavredis

Cleopatra Mavredis

Cleopatra is NCR’s Global Marketing Manager for Channel Solutions and has more than 20 years of experience in the ATM industry. NCR’s channel solution portfolio is comprised of APTRA Vision, Inetco Insight and OptiSuite solutions.

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