Why cash demand remains strong in Hong Kong and China

China and Hong Kong are among the most technologically advanced places on the planet. Hong Kong is a modern metropolis with an expanding fintech sector, while China is home to two of the world’s biggest, most innovative cities in Beijing and Shanghai.

But despite the array of technologies and cutting-edge services on offer in these locations, when it comes to money, local people still value traditional banking channels and payment methods.

Cash and ATMs drive financial inclusion in China

According to Retail Banking Research (RBR), China and India are the largest contributors to the five percent worldwide growth in the number of ATMs in 2015. There were 24 billion withdrawals from ATMs across China in 2015, also according to recent figures from RBR. That’s almost a quarter of the worldwide total of 99 billion cash withdrawals recorded over the course of the year. The rate of growth in use of ATMs across China accelerated to 23 percent. RBR cited improving financial inclusion and a drive by banks to move more transactions onto the self-service channel as key factors in this increase.

Similar trends were noted in a number of emerging markets in the Asia Pacific region, the Middle East and Africa, such as Indonesia, Malaysia, Saudi Arabia, Egypt and India. Growth in ATM use has been particularly strong in Asia-Pacific markets, where the overall number of withdrawals increased from 47.1 billion in 2014 to 54.5 billion the following year.

Customers have also shown ongoing demand for cash withdrawals in mature markets. In Spain, for example, ATM activity increased by eight percent as the national economy started to recover.

RBR research leader Rowan Berridge said: “Global usage data points clearly to the enduring importance of the ATM channel, both in mature and developing markets. Despite rapid growth in cashless payments, demand for ATMs remains robust and we forecast cash withdrawal volumes will continue to increase in most countries for the foreseeable future.”

Hong Kong’s cash culture

Hong Kong has many characteristics that would seem to make it an ideal candidate to go cashless. It is a relatively small, self-contained city, home to a generation of young consumers who are comfortable with technological growth and innovation.

But as the South China Morning Post recently pointed out, Hong Kong has a strong cash culture and is a long way away from removing physical currency from its financial system. There are various digital payment options available in the city, but many markets, smaller retailers, taxi firms and other crucial local services continue to prioritize cash payment. Some computer stores add a three percent surcharge for credit card transactions, meaning cash is the preferred payment method for many customers.

Simon Dixon, co-founder of global online investment platform Bank to the Future, said: “Hong Kong is the most ­modern cash-based place I’ve ­ever seen.”

A spokesman for Bank of China said there are some crucial factors that need to be considered before Hong Kong starts to move away from cash, such as convenience, special offers and cost.

For now, it’s clear that Hong Kong’s cash culture remains strong. If the latest ATM withdrawal figures are anything to go by, physical currency will be a crucial part of the financial system around the world – and particularly in the Asia Pacific region – for many years to come.


Image: iStock/danielvfung

Written by Colin Gordon

Colin Gordon

Colin Gordon is a Global ATM Marketing Manager based at NCR’s R&D Center in Dundee, Scotland. Colin is responsible for the marketing of NCR’s financial hardware portfolio with a specific focus on activities such as demand generation, sales enablement, market analysis and customer engagements for the ATM business.

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