The majority of the growth came from China and India where RBR noted authorities are urging financial institutions to roll out ATMs to bring unbanked populations into the formal banking system. In the developed world, growth will be significantly lower.
RBR noted even in developed markets, ATMs and cash usage go hand-in-hand and cash remained resilient. The big question then is will cash remain resilient.
Just this week banks in Japan announced a new cyber ‘J Coin’ with the aim of reducing cash use. Japan is the most cash intensive major economy with hard currency usage at 70 per cent of transactions by value compared with around 30 per cent in others.
According the RBA survey “the trend decline in the share of consumer payments made in cash continued in 2016 – survey participants made 37 per cent of their payments in cash, compared with 47 per cent in 2013 and 69 per cent in 2007”.
“The decline in the use of cash relative to other payment methods since the 2013 survey mainly reflects consumers switching to contactless cards for lower-value payments. Nonetheless, cash was still frequently used for smaller transactions.”
In Australia, direct ATM charges have disconnected ATM usage from cash usage to a degree – but not in a way positive for ATM operators.
The PSB annual report notes “as transactional use of cash has declined, people are carrying less cash in their wallets and making fewer ATM withdrawals. Data reported to the Bank by financial institutions indicate that the number and value of ATM withdrawals declined by 7 per cent and 4 per cent, respectively, in 2016/17, faster rates of decline than in the previous few years”.
Meanwhile: “The average value of ATM withdrawals has steadily increased from around $180 in mid-2012 to around $215, possibly because cardholders are economising on their use of ATMs in order to avoid direct charges (emphasis mine).
“The rate of growth of ATM numbers has slowed in recent years, consistent with the decline in ATM use and associated pressures to rationalise networks; according to the Australian Payments Network (AusPayNet), there were around 32 000 ATMs in Australia at the end of March.”
Payments industry scrutineer Mike Ebstein of MWE consulting, who is preparing a major report on ATM usage, argues the introduction of direct charging has actually hastened the decline in ATM usage.
“We doubt it was coincidental that the peak annual ATM transaction numbers occurred immediately prior to the introduction of direct charging in March 2009 with the high point of 867.4 million withdrawals in the 12 months to January 2009 being 2.5 times the volume of 1995,” he told bluenotes.
“The ensuing decrease has seen numbers slip back to 622.6 million to the levels of 2002. The more overt nature of direct charges at ATMs no doubt contributed to the slowdown but we don't believe that is the basis for the ongoing decrease.”
Ebstein says the overall picture is one of a secular decline in cash usage.
“In particular, we note the drop in cash-outs at eftpos over the past four years,” he said. “Cash-outs at point of sale via the eftpos network account for more than a quarter of the volume of cash withdrawals and the decline in these no cost transactions has been primarily a result of the overall displacement of cash as contactless technology drives cards into lower value territory.”