Cash is king; right? You might be forgiven for thinking that at the beginning of the third decade of the 21st Century that no one uses cash anymore. We are all content to tap and/or swipe. In the future, money might leave our bank accounts based simply on a scan of our retina or even an analysis of our heartbeat.
However, consider the statistics. Globally, by volume¸ some 75% of payments are still done using cash (by value, the figure is estimated at a third of this) and even in a market as large and developed as the US, almost one-third of payments by volume are still conducted with cash (per the Federal Reserve). MasterCard says regularly that cash is both its biggest competitor and its largest opportunity, a view held by the other larger processors too. The debate will continue to run.
Consider first the competitive threat. We noted with interest that stores in New York are now required to accept cash, per a bill approved by the city council at the end of January. Businesses are prohibited from only accepting credit card, mobile payment or other forms of digital currency. “Consumers should have the right to choose if they want to pay in cash or not,” per the councillor who initiated the bill. Analysis shows that ~17% of black residents and ~13% of Latino residents living in New York do not have bank accounts, compared to just 3% for white residents (per Bloomberg). Other cities that have approved similar bans in the US include New Jersey, Philadelphia and San Francisco.
Payment processors and consumer finance businesses would argue that their business models seek to reduce ‘friction.’ Put another way, they are trying to make digital payments as easy as possible. MasterCard highlighted, for example, at the time of its Q4 2019 results in late January that the introduction of contactless technology has had a significant impact in displacing cash. Globally, over 30% of face-to-face transactions are now contactless (versus 22% at the end of 2018). As an indicator of where the market might head, MasterCard noted that in Australia – an advanced user of contactless - over 80% of transactions under AUD$100 (~US$65) are contactless. Encouraging progress, for sure, but the real challenge will be for businesses to embrace explicitly solutions for the unbanked.
The document is provided for information purposes only and does not constitute investment advice or any recommendation to buy, or sell or otherwise transact in any investments. The document is not intended to be construed as investment research. The contents of this document are based upon sources of information which Heptagon Capital believes to be reliable. However, except to the extent required by applicable law or regulations, no guarantee, warranty or representation (express or implied) is given as to the accuracy or completeness of this document or its contents and, Heptagon Capital, its affiliate companies and its members, officers, employees, agents and advisors do not accept any liability or responsibility in respect of the information or any views expressed herein. Opinions expressed whether in general or in both on the performance of individual investments and in a wider economic context represent the views of the contributor at the time of preparation. Where this document provides forward-looking statements which are based on relevant reports, current opinions, expectations and projections, actual results could differ materially from those anticipated in such statements. All opinions and estimates included in the document are subject to change without notice and Heptagon Capital is under no obligation to update or revise information contained in the document. Furthermore, Heptagon Capital disclaims any liability for any loss, damage, costs or expenses (including direct, indirect, special and consequential) howsoever arising which any person may suffer or incur as a result of viewing or utilising any information included in this document.
The document is protected by copyright. The use of any trademarks and logos displayed in the document without Heptagon Capital's prior written consent is strictly prohibited. Information in the document must not be published or redistributed without Heptagon Capital's prior written consent.
Heptagon Capital LLP, 63 Brook Street, Mayfair, London W1K 4HS
tel +44 20 7070 1800
fax +44 20 7070 1881
email [email protected]
Partnership No: OC307355 Registered in England and Wales Authorised & Regulated by the Financial Conduct Authority
Get The Updates
Separated they live in Bookmarks right at the coast of the famous Semantics, large language ocean Separated they live in Bookmarks right