I. Introduction
This
paper reports estimates of the use of cash by consumers to pay for goods and services in ten diverse countries between
2000
and
2011:
France,
Germany,
Italy,
Poland,
Portugal,
Spain,
Sweden,
Turkey,
the
United
Kingdom, and the
United
States.
It
then presents projections of the use of cash in these countries from 2012 through 2022.
These
estimates are based on a combination of the historical trajectory of cash use in these countries and an analysis of various developments, including innovations in mobile payments, in those countries that could alter the historical trends. Our historical estimates are based on the total amount of cash that is withdrawn annually by consumers from ATM machines, over-­‐the-­‐counter
(OTC)
at bank branches, or from getting cash back at the point of sale
(POS).
This measure corresponds closely to the total amount of cash used by consumers for payments unlike the stock of currency much of which is used for hoarding.1
To
investigate the extent to which there are likely to be changes in the historical use of cash in a country we collected detailed information concerning a variety of factors that are likely to influence the future of payments and evaluated the likelihood of changes in historical evolution of cash use. This paper makes a distinction between the share of consumer payments that are made with cash (“cash-­‐spending share”) and the total amount of cash used by consumers for payments
(“total
cash spending”). The cash-­‐spending share reflects the propensity of consumers to pay with cash rather than paying with another payment instrument.
Total
cash spending depends on the propensity to use cash for payments and overall consumer spending.
We
generally adjust “total cash spending” for inflation and report
“total
real cash spending”.
The
paper reaches several key findings:
• Between
2000
and
2011,
total real cash spending decreased in five countries and increased in five with a GDP-­‐weighted compound annual growth rate of 2.4 percent.2 • Between
2000
and
2011,
the cash-­‐spending share declined in six countries and increased in four with a
GDP-­‐weighted
increase of 1.6 percent per year.3 1
Takala,
K.,
&
Viren,
M.
(2012).
Estimating
cash usage in the euro area. Working
Paper,
Bank of Finland,
Retrieved
from http://www.bundesbank.de/Redaktion/EN/Downloads/Core_business_areas/Cash_management/conferences/2012/2012_0 2_27_eltville_05_takala_paper.pdf?__blob=publicationFile
2
When we report growth rates over time we always use the compound annual growth rate
(CAGR).
To economize on words we usually refer to these as annual growth or growth per annum when there is no ambiguity.
We
3
• Between
2012
and
2022,
total real cash spending is forecast to decrease in three countries and increase in seven with a
GDP-­‐weighted
increase of 0.9 percent per year. • Between
2012
and
2022,
the cash-­‐spending share is forecast to decline in all countries with a GDP-­‐weighted decline of
1.5
per year. These averages mask significant diversity across countries.
Two
aspects of modern payments motivated the research we report here. A number of commentators have claimed that cash is a rapidly dying payment system as a result of the spread of electronic payments.
David
Wolman’s
2012
popular book The
End
of
Money
made the case that cash use is declining around the world and that the earlier this death occurs the better.4 Many observers have highlighted the impact of
recent