[Dave Birch] The first money appears to have been shells coloured with red ochre.  These appear 100,000 years ago in Africa.  Are we now in the days of the last (physical) money?  APACS report that in 2004 cards overtook cash by value and that in 2014 they will overtake them in volume.  That’s if anyone is still using cards by then: I’ll be using my phone to buy packs of gum.

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The annual APACS report on the Way We Pay has just been released and it shows that we’re using more cash than ever in the U.K.  The proportion of cash demands met by cash machines has nearly doubled over the last ten years from a third to two-thirds (which means a lot of people must still be going to the bank to withdraw cash, something I can’t remember doing) with the total amount withdrawn more than doubling from £80 billion to £180 billion.  The figures show that other card-based cash withdrawals (eg, cashback at retailers) are now 12 per cent of personal cash needs in 2006 (up from 8 per cent in 1996).  But the acquisition of cash through non-bank channels (such as wages and state benefits) and via cheque and passbook withdrawals from accounts has diminished significantly from almost two-thirds of all cash acquired ten years go to under a quarter today.

Sandra Quinn, director of communications at APACS, says:

During 2006 we spent £274.3 billion in cash; it is interesting to look at the methods we use to acquire this cash and how our preferences have changed over the years… Demographic trends have also shaped the pattern of cash acquisition; in 2006 for the first time, more than half of over 65s are regular users of cash machines.

The report goes on to forcecast that cash machines will dispense an increasing proportion of all personal cash acquired, reaching 81 per cent in 2016, with £220 billion expected to be paid out.  I’m not sure about this prediction, because I am convinced that the use of cash will fall much further by then.  Sandra says that

Cash currently accounts for 63 per cent of all the payments we make, however looking forward, the total demand for cash in value terms is projected to see a very modest decline over the next ten years due to the increasing popularity of non-cash payments, in particular developments like contactless cards.

It’s not contactless cards, I think, that are the key technology in terms of non-cash payments, it’s mobile phones.  And having been playing around with the combination of contactless cards and NFC phones for a variety of clients, I’m more that cash is on the way out quicker than APACS predict.

If we’re looking forward to 2014, though, I think you should pay more attention to what young persons think rather than what people like me think.  I came across some interesting comments from young persons in article from New Jersey.  Alex Miller (19) uses a debit card for purchases instead of taking money out at a cash machine because it’s easy and it avoids ATM fees.  Susanna Goulert (21) uses a debit card becuase she’s worried about taking on debt.  The article refers to them as Generation P, but I’ve no idea what this means.  I’ve only ever heard of Generation X (which I think I used to be) and Generation XXL (which I am now).  Anyway, it says that Generation P think it’s easier to spend more with plastic than with old-fashioned dollar bills, which may well be true but I like to hear some other opinions.  The Dell computer kiosk where Alex Miller (19) works doesn’t even accept cash, forcing customers to trade cash for gift cards at the mall’s customer service counter. He figures that’s the rule because cash can be stolen. Not only that, but an employee would have to count the cash and take it to the bank (my emphasis) and goes on to say that

It saves money in the end not to have money.

The coffee shop where Katie Sterner (19) abandoned their minimum transaction size and now customers regularly put payments of less than $5 on cards.  I don’t know what this does for tipping, or if the tips are automatically added (unless the customer presses some kind of "decline service charge" button or something).  Seven out of 10 consumers in Generation P use payment cards for small payments.  Susanna Goulert (21) charges cans of drink to her card and Alex Miller (19) once charged a pack of gum. Neither would be surprised if one day paper dollars and metal cents go away, and nor would I.  But talking about cans of drink reminded about the complex relationship between P and XXL: it transpires that Coca-Cola have discovered that customers spend a third more at vending machines that take cards, which is why I am so confident in my prediction that in the short term it will be unattended channels that are most revolutionised by contactless and mobile payments.

These opinions are my own (I think) and presented solely in my capacity as an interested member of the general public [posted with ecto]

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