Trends in cards and cash
Suddenly my reader is full of lists of trends – this one spotted by Dave Birch at Digital Money Forum, about the trends shaping the European payments market. The headline seems to be that it is going digital – as you would expect, but only slowly.
The trends in summary:
- Non-cash payments are inexorably replacing cash payments, but unevenly. In Iceland, nine in ten papyments are non-cash, in the UK it’s one in four.
- Electronic payments are replacing paper payments. Does the personal checque have a future of more than twenty five years?
- Direct debits are losing market share. There are technical reasons to believe that this might change, but I’d say not – they make consumers suspicious because they are too much of a temptation to service providers, industry guarantees notwithstanding.
- Self service is replacing branch banking – although the number of bank employees is all but unchanged, probably because they’ve moved from branches into other channels (e.g. phone banking).
- Debit cards are growing faster than credit cards, in terms both of volume and value. In several markets credit card payments represent only one-fifth of the payments market.
- ATM withdrawals are getting more expensive and – perhaps unsurprisingly – the number of withdrawals per ATM per month has fallen by a third
Davd Birch notes that online payments and mobile payments are still all but invisible in terms of market data.
And there’s an interesting point picked up from the original article in SPEED magazine (it’s a cunning banking acronym, just to manage expectations) which was written by Harry Leinonen, who’s responsible for payments policy issues at the Bank of Finland. This is that significant changes in payments systems take five to ten years to be implemented. And the reason for this is not because of market complexity (which would have been my initial assumption) but because there is poor information about costs and prices. Oddly, one would imagine that this was something that bankers would ensure they had good information on, given their line of work.