[Dave Birch] With the fifteenth annual Digital Money Forum in London on 28th/29th March 2012, and spring fast approaching, a young man’s thoughts naturally turn to the war on cash. Surely, all around the world, cash is in retreat, settling into last redoubts, facing unstoppable waves of electronic payment innovation and preparing to come to terms with the inevitable? Actually, no.

Apart from opening multiple accounts, many Nigerians are now investing in safes with the intention to keep cash that could not be banked at home.

Reminded of the risks associated with keeping large amounts of money at home or office/shop, a trader at the Ladipo market, Chike Olisah, said: “Na God dey protect person.”

[From The Nation – Nigerians devise new methods to beat CBN cashless economy policy]

Good luck with that Chike – personally, I’ll stick with Barclays, unlike a great many of my compatriots apparently.

More than £5.6 billion in cash is stashed away in the UK’s homes, with one in 10 people believing their money is safer there than in a bank, the savings safety net has found.

Excluding the contents of their wallets, people typically keep £218 at home, while around one in 33 people has more than £1,000 squirreled away in their house, the Financial Services Compensation Scheme (FSCS) said.

This hoard, kept tucked under mattresses and in jam jars, is largely unprotected, with even the top insurance policies only covering people for up to around £1,000, the FSCS warned.

[From ‘£5.6bn cash stashed in UK homes’ – National News – News – Coventry Telegraph]

This is insane. First of all, money stored as cash loses its value even faster than money stored in a bank, and with inflation running at more than 3% per annum, that means it’s crazy to keep a £1,000 cash pile at home, unless you are a drug dealer or corrupt politician or journalist. I suppose that since the UK is famously a country where 50% of the population don’t know what 50% means (and wouldn’t know an APR from a hole in the ground) this is to be expected though. Secondly, to imagine that your average £218 is “safer” under your bed than in the bank flies in the face of common sense. I got a letter from my bank the other day informing me that (for no reason I could fathom) the British government is now guaranteeing personal accounts up to (if memory serves) £85,000! So now I don’t care which bank I put the money in – I can put it in the dodgiest bank I can find provided it pays the highest interest rates – because Joe Taxpayer will be bail me out of they go bust. Fantastic. Why keep the money at home – where it can be lost, stolen, eaten by vermin or accidentally burned – when you can put it in the bank with total safety.

I suppose one argument might be that it’s inconvenient to have to go to the bank, another might be that not everyone takes a card, and still another might be that one might have to make unanticipated person-to-person payments but now that even the UK has Barclays PingIt, and will soon have the Payments Council’s cross-sector solution, and now the mobile operators are stepping in as well to give everyone plenty of choice.

O2 is poised to launch a mobile money transfer app to rival Barclays’ “Pingit”, effectively opening the technology to all banks.

[From O2 to launch mobile money transfer app to rival Barclays’ Pingit – Telegraph]

Note that O2 have applied for their own Electronic Money Institution Licence (ELMI) so that they don’t need a bank in the loop either. No-one will need to keep cash at home, write cheques or go to the bank to pay cash in ever again.

It’s bad enough keeping money at home in the UK, where you have a choice, but in developing countries where the poor have no choice, cash is a disaster.

Adelaide, a sales assistant in an office, was robbed on her walk home from the office a few months ago – while carrying a month’s salary she had just received. Despite losing a whole month’s income, she still does not want to receive a direct deposit of her salary since she does not trust the bank.

[From Cash Really is King]

Fascinating. This particular article begins by quoting someone as saying that “there are no charges with cash” and then proceeds with a set of personal testimonies about cash being lost, stolen and expensively transported. Yet people think it’s free. Very odd.

But hold on. Back to the story. If holding cash in developing countries is even more mad than holding it in developed countries, why are Nigerians stockpiling cash at home? Is it because they are as innumerate and poorly-educated as Brits? Of course not. It’s because the Nigerian government has begun its war on cash, thus making cash even more desirable than it was before. The absolutely fascinating article about this in “The Nation” explains:

many Nigerians, especially traders and others who believe that transacting all their business through banks will enable government know their worth and tax them accordingly, are devising alternatives to beat the policy.

[From The Nation – Nigerians devise new methods to beat CBN cashless economy policy]

The Nigerian government is trying to encourage non-cash payments, and has been puling out all of the stops (short of doing the one thing that would actually help, which is deregulating mobile payments) to persuade people to use cards instead. To bb honest, it’s not going that well.

At a Filling Station on Itire Road, Surulere, there is a sign urging customers to pay for petrol and other products using their cards on the PoS machine. But attempts by these reporters to pay for petrol failed as the station attendant said neither him, nor the station manager could operate the machine.

[From The Nation – Nigerians devise new methods to beat CBN cashless economy policy]

Whether the guy really knows how to operate the machine or not isn’t the point: the point is that he won’t. It’s human nature: if I don’t believe everyone else is paying their taxes, then I won’t pay mine, and this is a much bigger obstacle to economic efficiency than the cost of POS terminals or the regulation of mobile payments.

So where does the war on cash go next? Who knows, but perhaps we’ll get a few ideas at this year’s Forum. I’ve assembled an amazing expert panel to discuss the road to ceaselessness in different European economies, so if you would like to get into an informed discussion about this, and perhaps pick up a few ideas for new electronic payment businesses, come along and listen to Melanie Johnson (the chair of the UK Cards Association), Geronimo Emili (founder of “No Cash Day” in Italy), Simon Lelievedlt (an expert on the history — and future — of the Dutch payments sector) and Maria Giannakaki (a lawyer from Greece who has written about their attempts to tackle cash) then come along to the Digital Money Forum on 28th March 2012 — see you there!

These are personal opinions and should not be misunderstood as representing the opinions of
Consult Hyperion or any of its clients or suppliers


  1. You show great confidence in both the government, for guaranteeing bank balances, and the banking system. What happens in case of a bank holiday? What if the money guaranteed, but we can’t withdraw it? Is the government seriously able to guarantee all that money at the same time? And surely the more money is in the banks, the bigger bubbles they will blow. Doing business with banks post 2007 is morally reprehensible. and the money system now is fraudulent on a scale few people dare comprehend.

  2. My knowledge of APR may be roughly equal to the reciprocal of (1 + i) to the power t but “ceaselessness” is something I can understand – are you seriously offering immortality with electronic cash?

    Understanding of the Greek economic situation is spread pretty thinly around the world. Perhaps “cashlessness” would be more readily grasped.

    [Dave Birch] Damn that spalling chocker

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