In November 2021 the Euro Retail Payments Board (ERPB) Working Group on Access and Acceptance of Cash ERPB issued its report.

David Fagleman, of the consultancy Enryo, has recently presented and written about cash in circulation (CIC). He makes the case that CIC data provided by central banks is unhelpful because it overstates the case for cash usage and creates confusion about what is actually happening.

When one looks at the pandemic data it consistently shows a drop in cash usage, as it does here in Belgium. However, the nuance perhaps points to a different story.

Philip Lowe, Governor of the Reserve Bank of Australia (RBA), spoke recently at a conference about the future of payments in Australia. He said that the direction of change was ‘pretty clear’.

Amazon has announced that from 19 January 2022 in the UK it will stop accepting Visa credit card payments due to their high cost. This follows the post-Brexit removal of the interchange cap imposed by the European Commission. Amazon has also introduced surcharges on Visa credit cards in Singapore and Australia.

Post offices are often proposed as a solution to providing access to cash. The US Center for Monetary and Financial Alternatives have argued that this is to fundamentally misunderstand the case of the unbanked.

BankServ Africa builds and operates essential payment infrastructure in South Africa and 20 other countries. It operates as a utility with a mutual ownership structure of Nedbank, Absa Bank, the Standard Bank of South Africa and FirstRand Investment Holdings.

A paper by the Einaudi Institute for Economics and Finance (EIEF), ‘Cash: A Blessing or a Curse?’, examines what happened in Mexico when changes to cash availability were made.

Westpac, a major Australian bank, has re-designed its point-of-sale (POS) terminals to help blind and visually impaired people use them more easily. 110,000 machines are being changed for Android-based devices with new functionality.

The Turkish lira is sharply down in value this year, over 40%. On 24 November bitcoin hit a new all-time high after the lira dropped 15% on the news of President Erdogan defending the reduction in interest rates in Turkey at a time of 20% inflation.

12 editions of Cash & Payment News™, 12 weeks of Digital Currency News™. What have we learnt? What has changed?

The UK is facing significant pressure on its cash infrastructure, sufficient to put access to cash on the political agenda. 2021 draws to a close with a major announcement that some of the largest UK banks will create a network of shared banking hubs to maintain cash facilities for communities where cash services have ended.

OMFIF’s Digital Monetary Institute has worked with Giesecke + Devrient (G+D) to issue a paper ‘Consumer Attitudes to CBDC: considerations for policy makers’. The paper includes an introduction to CBDCs and an overview of the rationale for CBDCs, the work being done around the world and the challenges being addressed.

At OMFIF’s European payments and digital assets conference CBDCs were on the agenda. Wholesale CBDCs are more familiar ground for central banks since they can be regarded as exploiting a technological opportunity rather than a major structural change.

Four recent stories about digital payment crime highlight the changing profile of financial crime from payment cards to cryptocurrencies.

The latest Bank for International Settlements (BIS) Innovation Hub has been opened by the Federal Reserve Bank of New York, joining Hong Kong, London, Singapore and Switzerland.

There is an assumption that cash is a driver of the shadow economy, but this is not proven by empirical evidence. Occasional paper 649 from the Banca d’Italia used the decision to increase the limit on cash usage as an opportunity to study what happened to cash and the shadow economy.

NatWest is committed to shaping and accelerating the UK’s cash cycle transition to a lower carbon economy. As part of this commitment in September 2020 NatWest brought together 36 organisations to discuss sustainability and the environmental impact of cash.

The Deputy Governor of the Bank of Jamaica (BOJ), Natalie Haynes, has put its work on CBDCs in the context of the government’s financial inclusion strategy. The BOJ sees a CBDC as an important tool in allowing people to access financial services and products.

The Dutch National Bank (DNB) spoke at the recent European Cash Cycle seminar (ICCOS) about the McKinsey study commissioned to consider the cash infrastructure the Netherlands will need for the next 10 years. With cash transactions now representing 20% of all transactions, down from 32% pre-pandemic, the Netherlands is preparing for a less cash society.

On 8 November 2016 it was announced that from midnight that night the two top denominations in India would no longer be legal tender. These two denominations represented 86% of the cash in circulation. A discussion paper from Monash Business School reviews findings from new modelling of that event that investigated the impact of that action on aggregate output, welfare and the size of the shadow economy in India.

Last month we reviewed the Bank of Canada’s report on the impact of the second wave of COVID-19 on cash usage in Canada. This month we consider a report using data from four countries, the UK, the US, Spain and Mexico, as well as the EU.

David Sax, a journalist, has written a book ‘Revenge of the Analog: Real things and why they matter’. He makes an interesting case for analogue products such as banknotes. The digital world has been with us for over 20 years, and it has brought significant benefits, usually related to convenience, choice and cost.

With the UK recently hosting the 26th UN Climate Change Conference of the Parties (COP26), companies in the UK cash cycle are thinking about what they can do to play their part.

Kantar, who deals in consumer knowledge and insights, wrote an interesting piece last year about how they can help businesses make the consumer experience better with all the benefits for customer satisfaction that come from it.

Turkey has a high rate of inflation and household demand for cash has been increasing steadily over the past ten years. The impact of the pandemic was, initially, a decrease in demand because of the shutdowns but, after vaccinations were introduced, demand recovered very quickly.

The Central Bank of Sri Lanka introduced a national QR code standard for local currency payments in July 2019. Known as LankaQR, 24 payment apps from 21 financial institutions have now been certified for use with the system. The central bank has begun a nationwide rollout of the LankaQR payment system.

Prof Dr Julia Pitter spoke at the recent Bundesbank cash symposium about the relationship between people and cash. According to Dr Pitter, a business psychologist at the Internationale Hochschule in Vienna, cash is more than a payment.

The Bank for International Settlements (BIS) wrote an article for the Annual Review of Economics that laid out work done on Central Bank Digital Currencies (CBDCs) to date. The paper puts CBDCs in context of all payment methods and considers why and how CBDCs are being developed and the challenges central banks are grappling with.

The Dutch National Bank (DNB) spoke at the recent ICCOS seminar about the McKinsey study commissioned to consider the cash infrastructure the Netherlands will need for the next 10 years. With cash transactions having recovered to 20% of transactions, down from 32% pre-pandemic, the Netherlands is preparing for a less cash society.

The Bank of International Settlements (BIS) has issued a paper ‘What does digital money mean for emerging market and developing economies?’. The paper questions whether stablecoins are the answer to all problems and whether other digital solutions have a role to play.

The Monetary Authority of Singapore (MAS) ran a global retail CBDC challenge competition with the results announced at the Singapore Fintech festival. It received 300 submissions from over 50 countries.

There are concerns that with the UK’s contactless limit rising to £100, crime is more likely. In addition, the lack of ‘friction’ at the point-of-sale could increase the risk to retailers of unintended losses from consumers who present a card without it registering and then leaving the shop.

The Economist’s 1843 magazine recently published an article, ‘The Mystery of the Missing £50 Billion’. It tells the story of a young lady caught at Heathrow with five suitcases containing nearly £2 million in banknotes.

On 20 October the UK House of Commons had a debate about access to cash for nearly 90 minutes. 25 MPs spoke across every part of England, Scotland and Wales, including the Economic Secretary to the Treasury.

The US Securities and Exchange Commission (SEC) has approved the ProShares Bitcoin futures Exchange Traded Fund (ETF) application, the first cryptocurrency the US financial markets regulator has approved.

The future of cash is, without doubt, the most discussed, presented and written about topic in the cash and retail payments industry during the last 10 years. The topic took on a new dimension with the arrival of COVID-19, the effects of which feature in a discussion paper, titled simply ‘The Future of Cash’.

Whilst we may all be tired of hearing about COVID-19 and its impact on just about everything to do with our everyday lives, it is important for those involved with cash and payments to examine its impact on cash and payments to date and perhaps, more importantly still, the implications for the future.

With the UN Climate Change conference, COP 26, taking place through early November, we thought it would be appropriate to review the environmental work of stakeholders in the cash industry over the last few years.

With under 100 days to go to the winter Olympics, China is encouraging domestic and foreign retailers to enable payment using the e-Yuan, China’s CBDC. Although foreign visitors will not be able to travel to China for the Olympics, it continues to work towards having the e-Yuan up and running.

Whether CBDCs are designed as token- or account-based, regulations such as those governing money laundering and the funding of terrorism mean total anonymity/privacy is not possible. Given that while privacy is highly valued in principle, the public take little to no action to safeguard their privacy in practice, is it so important?

One-time passwords (OTP) are a central part of payment security. It is a concern, therefore, to read about hackers hijacking OTPs sent via SMS by Singapore banks to their customers, resulting in fraudulent credit card transaction worth S$500,000, as recently reported by the Monetary Authority of Singapore.

Quick Response (QR) codes, tiny black-and-white squares, can be read at ten times the speed of traditional bar codes; hence they were called ‘Quick Response’ codes or QR codes for short. They are two-dimensional black and white barcodes that can reveal a URL (web address) or other information with a scanning device.

The Bank of Canada (BOC) has a Currency Inventory Management Strategy (IMS) based on its high-speed sorters that capture the image of every banknote, including the serial number, along with the date the banknote was created, shipped from the central bank’s distribution sites and returned to them.

CashEssentials – the cash and payments think tank – has launched the CashTech Forum to promote innovation and technology, thereby ensuring a sustainable and future-proof cash ecosystem.

The Central Bank Payments conference has had to become virtual and will now take place as four separate half day events. These will be held on 8, 15, 22 and 29 November.

In place of the annual in-person Future of Cash Conference™, a series of virtual events have been staged. The most recent was an Asia Pacific-focused two-day virtual conference held across four themed sessions in July.

The International Association of Currency Affairs (IACA) held its Excellence in Currency awards ceremony this month, the topic of which was 'Best Currency Initiatives Implemented in Response to The Covid-19 Pandemic’.

Benoît Cœuré, Head of the BIS Innovation Hub, recently spoke at The Eurofi Financial Forum. The focus of his speech was that central banks need to move faster on Central Bank Digital Currencies (CBDCs), with the private sector already on the move.

The subject of Central Bank Digital Currencies (CBDCs) has moved from ‘vague awareness’ in around 2016 to ‘big news’ today. To help people keep up, the publishers of Cash & Payment News™ (CPN) have decided to start publishing a weekly newsletter dedicated to CBDCs.

Project Dunbar involves the central banks of Malaysia, Singapore, South Africa and Australia. The project, initiated by the Bank for International Settlements (BIS), is to test the use of CBDCs for international settlement.

GSMA has published the number of mobile money accounts in 2020 in different regions, and how many of them are active. The paradox is why are only 25% of registered accounts overall actually active?

In July Germany experienced severe flooding in some regions, as high as seven metres in the town of Bad Neuenahr-Ahrweiler for example. It also resulted in significant quantities of banknotes stored in homes and businesses being damaged by flood water contaminated with mud, sewage and oil.

Ross MacDiarmid, Executive Director of the Mint Directors Conference (MDC), hosted Professor Pasquale Sgro, Professor Franz Seitz and Guillaume Lepecq to consider the question in the title, under the banner of ‘no such thing as a free lunch’.

15 organisations across the entire cash cycle have contributed 61 separate case studies illustrating what they have done to reduce their environmental impact for a white paper which will be ready for the UN Climate Change conference (COP 26) starting 1 November. A further five organisations will be providing more examples.

David Birch, the author, adviser and investor in digital financial services, has recently posted an article on Linkedin, ‘Why would anyone think it is a good idea?’. There is the argument is that shop keepers could always have accepted Bitcoin, but now they have to.

On 15 October 2021 the UK raises its contactless limit to £100 from £45. It also raises the cumulative transaction limit to £300 before a PIN must be entered. This increase means the UK now has the highest contactless limit in Europe and the seventh highest in the world.

The Post Office in the UK is playing an increasing important role in providing cash services to communities. It now provides cash services for over 30 banks and building societies as part of a Banking Framework. Customers can withdraw or deposit cash at any of the 11,500 Post Office branches.

This paper opens asking three questions from a legal perspective; Do central banks (CBs) have the authority to issue digital currency? Can Central Bank Digital Currencies (CBDCs) be real ‘currency’? Should digital currency be legal tender?

In April 2020 Harro Boven and Peter Wieters published a Dutch National Bank (DNB) Occasional Study on the objectives, pre-conditions and design choices for Central Bank Digital Currencies (CBDCs). Harro wrote an abridged version that was used in Payers December publication about CBDCs which is summarised here.

This year the Bank of Canada has published 9 staff analytical notes and staff working papers discussing Central Bank Digital Currencies (CBDCs). As the most recent paper says, as a contingency the Bank of Canada is looking to build its capability to issue a cash-like retail denominated CBDC.

On 12th October the European Central Bank (ECB) opened a public consultation on the creation of a Digital Euro, a Central Bank Digital Currencies (CBDCs). The logic is that the increased usage of digital payments may mean that a Digital Euro is needed to safeguard citizens.

The Institute of Electrical and Electronics Engineers (IEEE) has called for a ‘digital Bretton Woods’ to set standards for digital currency and trade systems. Its call comes in the context of today’s digital platforms that handle more than just finance, but trade, tax and audits, and it does this across borders.

There have been a number of articles this year about financial products targeting children with the aim of teaching them to save, spend and think about money ready for when they are adults.

Peterson K Ozili has written about financial inclusion and why it is harder than it looks. Many of the barriers are within the control of governments to remove by investment and subsidies. Others, the cultural, social and income barriers are a much more significant challenge.

The Economist Intelligence Unit has issued a paper, ‘Going Digital. Payments in the Post-Covid World’. It is interesting both for what it says and how it says it.

Rwanda is a relatively small land-locked African country in the Great Rift Valley bordering Uganda, Tanzania, Burundi and the Democratic Republic of the Congo. It is the most densely populated mainland African country with a young, mainly rural population numbering 12.6 million.

The Federal Reserve Bank of Kansas City has gone public encouraging people to use coins and to return them into the cash cycle. After the coin hiatus last year, which saw the formation of the Coin Taskforce and limits on the issue of coins to retailers and institutions, the situation had eased with the limits lifted and normal service resuming.

Following the Digital Monetary Institute’s (DMI) CBDC conference in April this year and the announcement of ‘The CBDC Conference’ 3-6 October 2021, there is now a rush to hold CBDC dedicated events.

CSMPI’s latest Insight magazine reports on card fee changes in 2021 around the world. It suggests that each tweak in the fees may appear small but, overall, the additional revenue is likely to be over $1.1 billion in the US alone.

The Bank of Korea is investigating adjustments needed in the payment system if CBDCs are launched. The Kakao consortium and two tech affiliates of the Samsung Group are to run a pilot programme for issuing and distributing CBDCs and looking at transferring money and remittances between countries.

aRussia’s second largest bank, VTB, has been working on tools to identify the optimum location for bank branches and ATMs. It has used a wide range of parameters, over 5,000, to calculate how to reach the most customers and generate the most sales from a new location.

The Banca d’Italia (BdI) issued a technical paper in July analysing 20 years of cash data to understand cash circulation, important to a central bank for planning cash production and its monetary policy implementation framework.

As an initial member of the European Retail Payment Board (ERPB) working group, the European Security and Transport Association (ESTA), supported by other organisations, sought to foster debate on a number of issues relevant to ‘obstacles to cash acceptance’, a topic being investigated by the ERPB and about which it had issued a questionnaire.

LINK, who run the UK’s main shared interbank network of cash machines, has commissioned a report to look at how the UK’s cash distribution industry can reduce its carbon footprint.

The Federal Reserve Board (FRB) of Atlanta has published an article by Oz Shy, ‘Digital Currency, Digital Payments, and the ‘last mile’ to the unbanked.’ As the number of cashless locations increases, the article considers what stops people going digital and looks at policy options in response.

The European Retail Payment Board (ERPB) issued a questionnaire about acceptance and access to cash in April 2021. In mid-April the European Secure Transportation Association (ESTA) withdrew from the ERPB working group on the basis that the ERPB’s investigation about cash usage was too narrow.

In September 2020 Reconnaissance Consulting Group was asked to consider what would happen to cash at a future moment where the world economy and society had re-opened living with COVID.

As a reminder, CBDC announcements were made in May relating to Brazil, Georgia, Japan, Kazakhstan, Norway, Pakistan and Russia and in June to Indonesia, Korea, Mauritius, South Africa and Thailand.

China has decided to stop cryptocurrency mining in the interests of financial stability. Mining is the process that validates cryptocurrency transactions by solving cryptographic puzzles in return for receiving newly minted coins.

A number of states and cities in the US have implemented or are considering legislation to make cash acceptance at retailers mandatory.

Enryo, the payment consultancy, addressed the ‘cash paradox’ in a recent piece in Finextra.

Financial crime, particularly digital financial crime, can feel victimless. The losses are factored into the fees and charges which are passed on in higher prices and the press seldom focus on the distress and stress caused to individuals faced with criminal activity.

This is a reflection on 12 months as Editor of Cash & Payment News™ (CPN), writing about the payment environment and the role of cash. With the impact of the pandemic providing the backdrop, a number of themes are evident.

Both Switzerland and the US are big users of cash. Here we report on surveys that show change is happening.

The Dutch National Bank (DNB) has written to the Dutch House of Representatives presenting its report, ‘The Future of Cash Infrastructure in the Netherlands’. The DNB commissioned a study from McKinsey in December last year as the basis for this report.

The Optical Document Security and Digital Document Security conferences have now been combined into one ‘super-conference’, Optical & Digital Document Security (ODDS).

The Bundesbank held its international cash conference in June 2021 on the topic of ‘Cash in Times of Turmoil’. The future of cash was extensively explored alongside the impact of the pandemic on cash usage and consumer behaviour.

Two articles recently cast a different light on financial inclusion. The first published by Cash Essentials and written by Manuel A. Bautista-González of Colombia University about cash in Mexico and the second published in the Irish Times. Very different stories but interesting perspectives on using less cash.

In 2019 National Westminster Bank (NatWest) commissioned independent academic research to look into the drivers of consumer payment behaviour, including consumer attitudes and intentions towards cash. The research was carried out by Professor Darren Duxbury, Dr Thanos Verousis and by David Marsh. This is a short summary of their work with the full research being published in due course.

In the last week there have been a number of payment related stories. What links them all is that they demonstrate that electronic payments face a range of challenges that have a direct impact on customers. The role of the regulator is evident in all of them whether requiring action or ‘guiding’ providers to take action.

This November, COP26, the UN climate change conference, will take place in Glasgow. Cash & Payment News™ and its sister paper Currency News™ have started work on a paper, ‘Cash: a Roadmap to Sustainability’, ahead of the conference.

Jens Eberhardt, Managing Director of Cashinfrapro, has written a useful paper – ‘Green Cash Logistics’ – which considers how modern ways of working can reduce the environmental impact of the cash cycle.

A survey carried out in February 2021 by the Dutch National Bank (DNB Cash) contained some good news for cash. In five years’ time over 70% of all age groups expect still to be using cash.

The Swiss National Bank (SNB) issued its working paper 3/2021 ‘How to issue a central bank digital currency’. Written by David Chaum, Christian Grothoff and Thomas Moser, the paper presents the SNB’s thinking about a token-based retail CBDC, a rather different approach from most other central banks.

On 11 June the Bank for International Settlements (BIS) opened its latest Innovation Hub Centre in London following on from hubs in Hong Kong, Singapore and Switzerland that have already been established. Canada, Frankfurt and Paris, Stockholm, supported by all of the Scandinavian central banks, and New York are planned to open in due course.

Central banks making statements about investigating or working on Central Bank Digital Currencies (CBDCs) this month include Bank Indonesia, the Bank of Korea (pilot June 2021-January 2022), Bank of Mauritius, the South Africa Reserve Bank (retail CBDC), and the Bank of Thailand.

Over the past year Currency Research has successfully pivoted to deliver online virtual events across its portfolio, with approximately 50 live and on-demand sessions reaching over 3,000 industry participants across the cash and payments industries.

A shortage of EMV chips is creating real risks for payments since these chips enable ATM cash withdrawals and all forms of digital payments.

Cryptocurrencies are almost all built on two different approaches – proof-of-work or proof-of-state.

Ralph Wintergerst, CEO of the G+D Group, has recently written an article published in the International Banker magazine. The article’s title is ‘Britain needs a digital central bank currency’, but in fact the article is an explanation of why any central bank needs a Central Bank Digital Currency (CBDC).

The Monetary Authority of Singapore (MAS) has issued its first Sustainability Report for 2020/21. The report has a section dedicated to reducing emissions related to currency operations. MAS has identified four areas of focus to reduce its currency related emissions.

In 2020 the number of ATMs fell slightly according to RBR who are about to publish their ‘Global ATM Market and Forecasts to 2026’ report. In fact, 2020 was a mixed year where the long-term growth in ATM installations slowed rather than stopped.

In 2015 Russia set up a national payments card network called Mir. It was set up with government backing after MasterCard and Visa cut off services to a number of the country’s banks following the annexation of the Crimea.

The Central Bank Digital Currency (CBDC) conference has now moved wholly online on 4-6 October 2021. Registration is now open.

Following the success of the Future of Cash online event in February 2021, the organisers – AGIS Consulting and CashEssentials – are continuing the conversation and providing a coherent story of today’s cash challenges and tomorrow’s opportunities. The next virtual event – taking place 6-7 July – will focus specifically on the Asia-Pacific region. The physical event is still on track to go ahead on the 9-10 November, in Madrid, Spain.

The term ‘programmable money’ is increasingly bandied about in articles, but what is it? It is largely considered in the context of B2B transactions. Perhaps a few simplistic examples of how it might work best illustrate why it is becoming a ‘thing’.

A recent article in Kenya’s Star newspaper looked at why the informal transport system of ‘matatus’ (privately owned cars or minibuses acting as shared taxis) does not make use of M-Pesa wholeheartedly. It suggests two reasons.

Levent Kocbiyik presented at the Cash Cycle Seminar (ICCOS) last year on behalf of the Turkish cash management company Bantas about achieving the right mix of technology in cash handling. He argues that ‘craft’ continues to play a core role as well.

Central banks making statements about investigating or working on Central Bank Digital Currencies (CBDCs) this month include Brazil, Georgia, Japan, Kazakhstan, Norway, Pakistan and Russia.

Finextra has published an article highlighting different visions for Central Bank Digital Currencies (CBDCs). Jon Cunliffe, Deputy Governor at the Bank of England, made a speech that said it was ‘probable’ that the ‘state will need to issue, public money’.

Three reports bring insight into the impact of the COVID-19 pandemic on payments in the US.

Card fees are complicated. CMSPI have issued a useful paper looking at Germany’s payment market and what has happened since 2015. The Merchant Service Charge (MSC), what merchants pay to receive a payment from their customer, consists of three elements, as below.

Without coins you cannot receive change when you pay with a banknote. Although banknotes receive most attention in the cash cycle, April’s MDC webinar reminded people why that is a mistake.

Deutsche Bank has announced that it will close 150 bank and Postbank branches this year and a further 50 Postbank branches next year. The CEO said that customers are coming to branches less often, preferring to use digital products such as remote advisory video sessions. In January Commerzbank announced it would close 340 branches in Germany.

The UK’s Post Office is not a bank and does not aspire to be one. However, it does provide essential cash services on behalf of all banks to all communities left behind when banks close. The banks still have a duty to be available for more complex products – typically now served through call centres, or video calls.

YouGov have issued their 2021 Global Banking and Finance Report, having surveyed 1,000 people in 17 countries representing a nationally representative sample with three exceptions. These were China, where sampling was ‘online representative’, India ‘nationally urban representative’ and Mexico, which was nationally representative but with an urban bias. Six Asian countries were involved – Australia, China, Hong Kong, India, Indonesia and Singapore.

Digital is hard. Digital is remote. Money matters and financial matters are not trivial. Are banks sure, therefore, that widespread branch closures are wise?

After several months of a COVID-enforced digital only publication of Cash & Payment News™, we are happy to announce the resumption of the hard-copy distribution of the newsletter from June. Thank you for your patience during the disruption and we ask for a little more forbearance as delivery services attempt to return to something like their pre-COVID levels.

One of the parts of the cash cycle most affected by the pandemic has been coins. The normal flow has been seriously disrupted as people have switched to card payments or have rounded cash payments to use notes in preference to coins. In February 2020 there were almost £3 million worth of 2p coins held in wholesale cash centres, but demand has continued to outstrip supply almost every week, and in the past twelve months over £2.2 million in new 2p coins have been issued into circulation but never returned. Where are they all and why aren’t the pennies behaving the same?

Financial inclusion is a hot topic as the move to online and mobile banking leads to fewer bank branches. When banks announce closure plans they quote how many customers now interact over the phone, internet or smartphone and the number of people registering new mobile phone apps (in the case of HSBC, 90% and 750,000 respectively in the last 12 months).

We are pleased to announce the formation of an Advisory Panel to help determine the direction and development of Cash & Payment News™. The following have kindly agreed to participate in this panel.

As part of its National Payment System, the South African Reserve Bank (SARB) is considering a new domestic card and payment system and has issued a consultation paper.

Augustin Carstens, General Manager at the Bank for International Settlements (BIS), made a speech at the end of March considering progress with CBDCs. He explained how the simpler payment process with CBDCs reduced risks, costs and time while addressing the weaknesses of today’s payment system - high credit card and cross border payment fees, a lack of universal access to digital payment tools and weak governance frameworks on big tech and other providers’ use of transaction data.

The European Association for Secure Transactions (EAST) has issued its 2020 report on ATM crime. EAST collects data from 21 Western European countries operating about 335,000 ATMs, 223,000 unattended payment terminals and 14.5 million point-of-sale (POS) terminals.

With Sweden’s decline in cash usage, Sveriges Riksbank is less involved in the payment system and is, therefore, less able to meet the requirement placed on it to promote a safe and efficient payment system. As a result, the Riksbank is conducting a pilot project to create a token-based Central Bank Digital Currency (CBDC) known as the e-krona.

The Banking Journal of the American Bankers Association (ABA) published an article ‘The Real Story On Bank Branch Closures’, about the decline in bank branches in the US. It was responding to a story in NPR that painted a picture of bank closures leaving whole communities devoid of bank branches, particularly in lower-income, rural and at-risk communities.

A recent article by the Dutch National Bank (DNB) explained that, as a consequence of the pandemic, its intake of banknotes has fallen to the extent that it is now issuing more euro banknotes than it is getting back in, a first since it started issuing them. The number of notes issued fell by 10% in 2020 but the number of notes received fell by more, by 25%.

Enryo, a financial services consultancy, conducted four public surveys of over 2,000 people in the UK from April 2020 to January 2021 and an additional survey in March 2021. It has just issued its report and presented a webinar of its results.

ADAM, which produces cash management software solutions, has written a series of blogs during the pandemic recording what has happened to cash in Italy in the last year. Its latest report updates the series through until December 2020, drawing some initial conclusions.

Outman Consulting has published a review of cash usage in Southern Europe, focusing on Italy and Spain. It surveyed 2,000 consumers in Italy and Spain in January 2021 to understand the impact on payments of the pandemic. It found that, for purchases under €10, the preference for using cash had declined from 78% to about 48%. Why and will the change stick?

As the use of Distributed Ledger Technology (DLT) based on blockchain grows, it is worth returning to an old story reported in an MIT Technology Review in February 2019.

The Bank of England and the UK’s Treasury have created a taskforce to coordinate the exploration of a potential UK Central Bank Digital Currency (CBDC). The announcement was at pains to explain that this was not intended to replace cash and bank deposits and that the UK has not made the decision whether or not to introduce a CBDC.

The ECB has published a comprehensive report of what has happened to cash in the euro area during the pandemic.

Visa, Mastercard, American Express and Discover Financial, as well as industry counterparts FIS, Fiserv and Global Payments, have formed the Payments Leadership Council to represent their position to the government and in the media on a range of issues. Card payments are in the spotlight currently.

With the Eastern Caribbean Central Bank announcing the world’s first CBDC based on blockchain technology, the CBDC activity level around the world continues to grow.

Google Pay is changing. The existing Google Pay will shut down in the US on 5 April and a new app has to be downloaded if you want to continue paying with Google on your phone.

The number of central banks announcing work on Central Bank Digital Currencies (CBDCs) continues to rise. This month there have been reports about CBDC activity by the central banks of the ECCB, Jamaica, Korea and Russia.

Wales, with a population 3.15 million, along with England 56.3 million, Scotland 5.46 million and Northern Ireland 1.89 million make up UK’s total population of 66.8 million. Although all countries in the Union are governed by the UK government based in Westminster in London, Wales along with Scotland and Northern Ireland each has a devolved Parliament with limited powers.

Gerhard Rösel and Franz Seitz have published a paper, ‘Cash and Crises: No Surprises by the Virus’, as a working paper for the Institute for Monetary and Financial Stability. This paper looks at cash usage across a number of key economies since the 1990s. It notes the trend towards cash being hoarded as a store of value, reflected an increasing proportion of cash in circulation being high value notes, but looks, in particular, at what happens to cash when there is crisis.

The Bank of Canada conducted studies into cash usage in April and July 2020*. This March it updated its staff discussion paper 2021-23 reflecting on these surveys and what they tell us about cash as pandemic containment measures lift.

At the online Future of Cash conference last month, Diederik Bruggink from the European Payment Council (EPC) presented its thoughts on how to make cash more efficient.

Alper Sayin, Director Cash Planning and Operations at Garanti BBVA, has summarised the key cash and payment trends facing Turkey in 2021. Cash is increasing but cost control remains high on the agenda, with new cash processing tools being used and an ATM pooling initiative being closely monitored.

RBR’s most recent study, ‘ATM Software 2021’, looks at the latest ATM developments across the world.

In 2016 Diebold and Wincor Nixdorf joined forces to form Diebold Nixdorf, creating a company with global reach in the self-service market. Diebold Nixdorf serves retailers and retail banks providing ATM and point of sale (POS) technology and software to run and integrate the technology and behind the scenes payment platforms. It also offers management services for all these products.

Bangko Sentral ng Pilipinas (BSP) has reorganised to combine its cash department and its payment department.

A recent paper, ‘COVID Cash*’, by Kenneth Rogoff and Jessica Scazzero considers the implications for advanced economies in the long-term trend of value being stored in cash, a trend accelerated by, and highly visible due to, the pandemic. They make two arguments.

In 2020 US consumers each spent $17,095 according to the US census bureau, $2,398 of which was online. CouponFollow surveyed 1,500 Americans in January 2021 about the state of cashless and touchless payment methods during the pandemic.

While the activity of retailers may, at first glance, appear of secondary importance to the world of payments, in today’s changing economic landscape it could have big implications, particularly when retailers of the scale of Walmart are involved and with card and payment fees rising.

Payments in their many guises are essential to the way we all live our lives, to buy bread and milk, to heat or homes and to do many other things. Around the world the majority of people take payments for granted and are able to choose the payment option that suits their needs for the particular transaction. However, many people don’t have this choice and have to rely on a single payment method, and this is very often cash.

Relative to its population, India has few ATMs – 22 per 100,000 people, according to the World Bank, compared with 81 in China. It also has one of the lowest ratios of ATM cash withdrawals relative to cash in circulation, according to a June 2019 RBI report, 'Benchmarking India's Payment Systems'.

The CBDC Conference, 3-5 October 2021, will go ahead in Frankfurt, although the organiser is remaining flexible to put it online if need be. Registration comes with a ‘COVID-19 guarantee’ so that people can be confident about committing to the event.

The last year has accelerated a number of payment trends, with the cash ‘paradox’ to the fore (cash in circulation up, cash transactions down). The Future of Cash conference laid out and explained the growing pressure on cash but also gave good data, examples and food for thought about opportunities for the future.

In October 2020 the Federal Reserve’s national Cash Product Office (CPO), with the Federal Reserve Bank of Atlanta and Federal Reserve Bank of Boston, conducted the annual Diary of Consumer Payment Choice survey.

In IMF Working Paper 2020 255, entitled ‘Dirty Money: Does the Risk of Infectious Disease Lower Demand for Cash?’, its author Serhan Cevik – a senior economist with the IMF – looked at data from 133 countries between 1995 and 2017 to understand how people react to a rise in infectious diseases. Against his initial study he then ran a further five subsets of data to test his findings. After controlling for macroeconomic, financial and technological factors, the data was clear that a rise in infectious disease reduces the demand for physical cash.

The European Central Bank (ECB) study, 'Foreign Demand for Euro Banknotes', set out to identify the demand drivers for euro banknotes and to estimate the share of euro banknotes in circulation outside of the euro area.

Digital currency covers more than Central Bank Digital Currencies (CBDCs), it extends to all the digital solutions from Bitcoin to Diem. Digital currencies store balances in anonymous electronic addresses.

If Central Bank Digital Currencies (CBDCs) do not solve a real problem, then they will fail. In a recent paper by Peter Bofinger and Thomas Haas, Professor for Monetary Policy and International Economics and Research Associate and Chair for Monetary Policy and International Economics respectively at the University of Wurzbürg, they throw doubt on whether central banks have found a compelling need for CBDCs.

Central Bank Digital Currencies (CBDCs) are much talked about. The IMF has published a detailed paper – ‘Legal Aspects of Central Bank Digital Currency: Central Bank and Monetary Law Considerations’ – which explains the legal position of CBDCs and has investigated the position of 171 IMF members to see which are currently able to issue a CBDC. The paper will help central banks think through this element of their CBDC preparations.

The Bank of International Settlements (BIS) received 65 responses to its latest Central Bank Digital Currency (CBDC) survey of which 21 were from Advanced Economies (AE) and 44 from Emerging Market/Developing Economies (EMDE). The results are published in BIS Papers 114, authored by Codruta Boar and Andreas Wehrli.

LINK, the UK’s main cash machine operator, reported a 37% drop in the number of ATM cash withdrawals in 2020, a significant fall. But that is still £1.6 billion withdrawn each week - £1,500 for each adult. With nearly 8% fewer free-to-use ATMs and nearly 18% fewer pay-to-use machines, these figures are even more impressive. John Howells, CEO of LINK, the UK’s largest cash machine network, made the point that ‘the sharp decline in ATM use brings significant problems (the) drop in transactions places enormous strain on the cash infrastructure’.

The Hong Kong Monetary Authority (HKMA) monitors payments closely. During 2020 there were some interesting variations that HKMA will track in 2021. The priority for 2021 will be to monitor and understand what is happening across a range of indicators so that HKMA can manage the appropriate supply of banknotes.

The Dutch National Bank (DNB) studied how an external shock, the COVID-19 pandemic, affected payments in the Netherlands, using an extensive payment diary that ran from January 2018 to October 2020.

On 26 January the European Court of Justice (ECJ) gave its judgement on the Hessischer Rundfunk case.

This is the title of a new Cash Essentials paper. The paper considers the role cash plays in economic and social life, the challenges it faces and how innovation is improving the efficiency of the cash cycle. The paper includes the line, ‘the capacity for cash to change will be integral to its continuing success’, and it goes on to explore what the future holds.

The Dhaka Tribune reports that between March and the end of November 2020, the number of Cash Recycling Machines (CRMs) increased from 266 to 684 in an attempt to make branches less crowded and to lower costs since less cash loading and replenishment of ATMs is needed, along with reduced cash movements, sorting and handling.

A recent working paper entitled ‘Institutional Hostility to Cash and COVID-19’ by economists Doris Neuberger of Germany’s University of Rostock and Eduardo Beretta from the Swiss Institute of Economics examines how the pandemic has boosted commercial incentives and government policies to nudge consumers away from cash.

Mastercard has announced that the interchange fee on products bought online in the EU by British card holders will increase from 0.3% to 1.5%. Debit card fees will increase from 0.2% to 1.15%. This fee increase is justified because now the UK is no longer part of the EU, fees will be charged at the ‘inter-regional’ fee level rather than ‘intra-regional’ fee level.

January’s edition of Cash & Payment News™ covered NCR’s bid for Cardtronics. NCR – which describes itself as ‘a technology provider for the financial, retail and hospitality industries’ – has now announced that it has entered into a definitive acquisition agreement to buy the company, paying $39 per share, valuing Cardtronics at $2.5 billion. NCR justifies this in its statement as accelerating its shift to ‘NCR-as-a-Service’ strategy, moving its mix of revenues across its business more to software, services and recurring revenue.

Cash Essentials, the independent initiative that seeks to provide a platform for debate about the payments and monetary ecosystems, has published its first edition of a Cash Glossary. The aim is to give the cash industry a shared vocabulary relating to payments and the cash cycle.

Reconnaissance International (RI), co-publisher of Cash and Payment News™ (CPN), is pleased to announce that it is moving to a new online platform incorporating a weekly newsfeed service alongside the monthly newsletter.

In December RBR ran an online conference for Self-Service Banking Europe. There is much in the news about attacks on ATMs and this was one of the areas of interest in the conference. Paul Nicholls from Oberthur Cash Protection, Spencer Marshall from HID Global and Duane Campbell from Tesco discussed what they are doing in this area.

Thus said Ralph Wintergerst, CEO of Giesecke + Devrient (G+D), to the Frankfurter Allgemeine newspaper before Christmas. G+D has invested significantly in this area to position itself for the future and to support its worldwide relationships with central banks. It is confident that cash will remain a core payment instrument but sees a future shift to Central Bank Digital Currency (CBDC).

Cardtronics runs 285,000 ATMs in 10 countries, making it the world’s largest operator of non-bank cash machines. This Houston based company is a major player in the cash industry but is now being pursued by two companies, firstly Apollo Global Management and Hudson Executive Capital and secondly NCR.

​UK Finance, who represent the banking industry, are reported by The Times newspaper to have asked the Treasury to increase the contactless payment limit from £45 to £100. Prior to the COVID pandemic the limit had been £30. The Financial Conduct Authority would have to approve any change.

On 1 January 2021, a new law came into effect in Sweden intended to secure access to cash and payment services.

In April 2020 Harro Boven and Peter Wieters published a Dutch National Bank (DNB) Occasional Study on the objectives, pre-conditions and design choices for Central Bank Digital Currencies (CBDCs). Harro wrote an abridged version that was used in Payers’ December publication about CBDCs which is summarised here.

Marie-Hélène Felt wrote the Bank of Canada’s Staff Working Paper 2020-56 'Losing Contact: The Impact of Contactless Payments on Cash Usage'.

Bantas is a Turkish based cash in transit (CIT) joint venture between three Turkish commercial banks. With about 1,600 staff, it looks after 48 cash centres, servicing 9,000 ATMs, 2,700 bank branches and 3,300 shops using 425 armoured trucks.

In the UK a company called BitcoinPoint has acted to make owning and using bitcoins easier. They are collaborating with the independent ATM operator Cashzone, who run 16,000 ATMs across the UK.

The European Central Bank (ECB) is keen that EU member states engage with the public policy debate around Central Bank Digital Currencies (CBDCs) for the eurozone. In this context, it is reported that the Italian Banking Association is starting a technical feasibility study into using Distributed Ledger Technology (DLT) for a future ‘digital euro’.

Doris Schneeberger, Head of the Currency Management Division at the European Central Bank (ECB), spoke at December’s RBR conference giving the Eurosystem perspective on trends and developments in the use of cash.

In the three months leading up to 9 December, NatWest, a UK bank, brought together 36 organisations to establish cross industry working groups to improve the environmental performance of the UK’s cash cycle. Three working groups were set up looking at energy, plastics and CO2 to establish best practice and to drive change.

A recent Bank of Canada Staff Working Paper on ‘Safe Payments’ (2020-53) posed the question whether private payment systems based on bank deposits provide the optimal level of safety?

At the ICCOS Americas online conference there was, unusually, a coin panel, ‘Coin, coin everywhere and not a cent to spend.’ The focus was on what had happened to coins in the US in the pandemic, why a Coin Task Force had had to be set up and what the situation is now. The panel consisted of Kathleen Young from the Federal Reserve Cash Services Product Office, Ashley Yayock from Walmart, Thomas Strauser from Loomis, JR Davis from Davis Bankcorp and Linda Sherry from National Priorities Consumer Council.

The Dutch National Bank (DNB) has commissioned a medium-term study to consider the cash infrastructure needed by the Netherlands. In October 2020 the DNB estimates that cash use at the point-of-sale had fallen to 20%.

Andy Haldane, Chief Economist at the Bank of England, made a speech about the move to digital payments. Despite all the innovation of credit cards, ATMs, faster payments, open banking etc., he quoted Thomas Philippon, Professor of Finance at the New York University Stern School of Business, who estimates that the unit cost of financial services has hardly changed over the last century.

YouGov have carried out a survey in 21 countries asking about payments in the pandemic, which provides an interesting snapshot on the relative impact of COVID-19 on cash usage around the world.

The Libra Association has rebranded itself as the Diem Association, its payment service operator will be called Diem Networks and its currency the Diem Dollar. Its Calibra blockchain group, responsible for the digital wallet that will hold the Diem Dollar, has already been renamed Novi.

Did much happen this year? A moment to reflect.

Allied Universal has offered 245 pence in cash for each G4S plc share and agreement on the terms of the offer have been reached. This values the company at £3.8 billion, representing a premium of about 68% to the closing price of G4S shares on 11 September 2020, and an 11% premium to the highest closing price in the previous year. GardaWorld had offered 235 pence per share, some 4% less. G4S Directors intend unanimously to recommend that their shareholders accept the offer.

In its latest Quarterly Bulletin, the Bank of England published an article ‘Cash in the time of COVID’. The article seeks to explain what it referred to as the cash ‘paradox’, that cash in circulation is up while cash transaction volumes are down, which has been brought into sharp relief during the pandemic.

Commercial banks are at the heart of the cash cycle and their branches have been their key customer touchpoint. If you read the news section on bank branches, you might think they are to become a side show for commercial banks. RBR held an online conference on branch transformation at the end of November. The move by customers online, using apps and telephone banking is accelerating a trend to slim down branch networks, and so this event was a useful insight into the future branch.

The European Central Bank (ECB) has published the results of a major study into the payment attitudes of consumers in the euro area (SPACE) and compared it with a similar 2016 study (the SUCH study on the payment attitudes of consumers in the euro area). It also published results of another large scale interim 2020 survey, the impact of the pandemic on cash trends (IMPACT) survey.

OMFIF’s Digital Monetary Institute recently published a report on the Future of Payments. The report is a thorough examination of non-cash payment developments but two elements stood out. Firstly, a striking infographic showing the age profiles of four parts of the world and, secondly, more information on the growth, importance and impact of mobile payments.

The Bundesbank (BBk) provides 25.5% of the fully paid capital that underpins the European Central Bank (ECB), but it has brought into circulation 29.9% of the value of coins in circulation (€8.46 billion). This figure has been stable for some time.

On 15 December a new approach to branch banking started in the UK. OneBanks has partnered with the Co-op retailer to open a fully staffed kiosk in the shop. Although opening in December, it only goes fully live in January. The kiosk is opening in Denny, a Scottish town which has not had any banking facilities for over two years. It is estimated 40% of Scottish towns have one or fewer bank branches.

Wholesale Central Bank Digital Currencies (CBDC) are a less talked about element of the CBDC conversation, perceived as more operational than revolutionary. However, the Bank for International Settlements (BIS) has successfully concluded a proof-of-concept project with the Swiss National Bank (SNB) and SIX to explore the performance of the technology to integrate a tokenised digital asset and central bank money.

The UK Parliament’s Public Accounts Committee (PAC) reported on the production and distribution of cash at the end of November. PAC was concerned that the cash distribution infrastructure is at risk, there is a lack of urgency in the response of the public bodies responsible with little action, a lack of clarity about the end goal and no realistic plan. Banknote stocks appear unnecessarily high without a clear explanation of why, and coin production appears unsustainable and not cost effective in the light of falling demand.