The great cash comeback

Our reporter spoke to Simon James of PayComplete about the future of cash

Cash is proving to be increasingly resilient in the face of rising avenues for digital payments. Indeed, the UK government has committed to keeping cash, no matter the alternatives that are introduced. 

FinTech Intel spoke to Simon James, chief executive officer of PayComplete, a company using cutting edge hardware and software to support businesses that still deal with cash. The conversation covered all things cash, including its durability, the alternatives, and what the future may hold for payments. 

How did you find yourself at PayComplete? 

I’ve been with PayComplete for about 6 years now, but my background is a little bit different. I spent 25 years plus in the digital world, in credit cards and processing cashless payments! 

I’ve worked all over the world, much of that in the US and Europe. But I felt I was spending too much time in the US; I wanted to come back to the UK and spend more time with my family. 

I joined PayComplete during a transition period. The company is more than 70 years old, and now owned by a private equity company. They bought 15 or 16 businesses, and my brief was to bring them all together to make them one central global business. It’s been a fantastic challenge; PayComplete’s current breadth of offering and the phenomenal talents and knowledge that we have managed to retain during the transition reflect the success of that unification and the efforts to now ensure we are defining a new frontier in the way businesses not only handle cash, but also how businesses should be looking at cash as a growth opportunity.  

PayComplete released a report that said 57% of businesses expect to never be fully cashless. There’s recently been a push away from a cashless society, why do you think this is? 

I think it’s a multitude of things. There’s always going to be a section of society that uses cash and that’s their only access. If we take the UK as an example, one in five people do not have access to digital payments. In other countries around the world, it can be much higher. We’ve just opened an office in South Africa where 80% of the transactions are cash. 

I also think with immigration and people moving all over the world and swapping countries, they often use cash for security. And Covid actually had a big impact in changing people’s behaviours. Obviously during Covid people were discouraged from using cash to prevent transmission of the disease. But people missed that interaction, so as soon as everything opened again lots of people used cash for this reason. 

Cash is also the easiest way to budget. With ‘cost of living’ being on the minds of most people globally at the moment, cash has been the answer for many to ensure they can not only budget effectively, but there is also a lot to be said for its tangibility in times of global volatility.  

Everything’s becoming more digitised, not just payments; there’s talk about digital ID cards amongst other things. More and more young people are pushing back about privacy. Do you think that’s a large part of their rise in cash usage? 

Privacy is a big part of it for the younger generation; they often don’t like leaving a digital footprint, they’re scared that ‘Big Brother’ is watching. Actually, the biggest growth in cash usage is among 18-to-25 year olds; it surprised us. They also like the budgeting factor. Then there’s the older generation that are just comfortable with cash. 

As I say, we’re seeing a trend. If you look at it globally, cash usage is about 33% of all transactions. If we go back to pre-Covid it was about 27% and falling, however last year it went up by a couple of percent, even in the UK, which is probably the most digitally advanced country when it comes to payments. For example, in the US, cash is more than 40%. 

The other side of the coin is that, if one in four people only use cash, retailers and hospitality have realised they could be missing out on critical revenue at a tough time. Say you have a bunch of people who want to go for a coffee; if one coffee shop takes cash and the other doesn’t, 1 in 4 people will go to the one that does. That simply cannot be ignored.  

Cash is also key when it comes to travelling. We work in 21 different countries; you land in Switzerland and get in a taxi at Zurich Airport: cash only. A lot of countries in Africa will charge you more if you want to use a card. So people carry multiple different bits of cash. 

Even in the UK, London has gone crazy for cash. The amount of cash in London now, due to tourism, is unbelievable. Our research also found that the amount of actual cash in circulation has nearly doubled in the last three years. 

All the headlines are about digital payments and a cashless society, but when you talk to people on the street that’s not necessarily what they want. 

Which is why we wanted to do the report: we wanted to reinforce what we were hearing from our customers. Especially for someone like myself, with 25 years in credit cards, cash was always the dark side. It was always reported that cash was going, it was being phased out, but it never disappeared. 

Inclusivity is key too. A really fun example was – I can’t be too specific – in a major city in this country, all of the undergrounds and trains are run by our customer. They did a pilot at six stations where they stopped taking cash. That pilot lasted less than five days, and they had to undo it because they had so many complaints, and it was causing major problems. 

Of course that’s government-owned, and this is where governments around the world are suddenly realising that they need to mandate and keep cash as shown by the recent announcement by the FCA. 

Digital payments cost money, so do you find a lot of smaller businesses are more cash oriented just because it’s more cost effective? 

Cash, for businesses without smart solutions for handling and banking cash, is actually just as expensive, if not more expensive, than digital payments because an awful lot of cash goes missing. In larger organisations the counting and processing of cash is also very manually intensive and costly. Smaller businesses can handle traditional processing of cash as they may only have one or two people that get involved in having to count cash and take it to the bank. But as businesses get bigger and more people get involved in the cash handling, we have seen how the cost of fraud, the cost of extra security to prevent loss and the inefficiencies that go with that are costing businesses dearly. For example at bigger retailers, you’ve got six to eight people who do nothing but count money. There are so many people touching that money without an audit trail and that’s where it becomes expensive. 

Another, bigger problem: banks don’t want cash. It sounds crazy, but they completely discourage shopkeepers coming in at the end of the night with bags of money.  

So the point here is that regardless of size there are significant challenges when it comes to optimizing the cost of cash while ensuring that consumers are given freedom of choice and revenue isn’t lost. This is where smart unified CashTech solutions really begin to change the narrative and open up new avenues to profitability for businesses of all sizes.  

If I think back to my first ever job in 2003, I worked in a fast-food chain who didn’t take card payments, who only accepted cash. 99% of the biggest global retailers are the exact opposite now, aren’t they? 

Absolutely! But again, even those fast-food chains have suddenly woken up and realised they’re missing out on a big chunk of society and even of their customer base. PayComplete are actually talking with a lot of those retailers to put in better technology; they currently have those big screens where you place your order and pay for it with your card. They want to add a facility on those to take cash, because they’ve realised it’s a gap. 

It’s actually quite strange that we’ve almost gone backwards in that sense. I saw all the changes when everyone was getting rid of cash and putting in card readers. Now they’ve thought, “We’ve gone too far, we need to go back.” It’s that choice: a lot of our customers want to give their customers choice. 

If you can do both digital and cash payments, that’s the only way to keep everyone happy, isn’t it? 

You’ve got to give customers choices. I think we’ll see a time when the point of sale won’t be just card, cash or mobile, it’ll also be bank-to-bank thanks to open banking as well as crypto. It’s going to keep evolving, it needs to. 

Do you think CBDCs will change the digital versus cash debate or do you think they will just change the digital side of it and cash will remain as-is? 

I think you’ve answered the question yourself! I also think there’s going to be a lot more resistance to CBDCs than governments think. If we go back to what I was saying about the younger generation and privacy, people will be scared. They’re scared of the unknown anyway and scared of change. 

There’s also this fallacy, similar to digital ID cards: why does everybody have to have one? Why do you need to know everything about me? The younger generation are challenging that notion much more, so I think the adoption of CBDCs will take a while. 

But even if they come in there will still be cash. There are 8 billion people in the world and at least half of those, when you take into account India and Africa and other countries, use cash exclusively. You simply cannot isolate that amount of the world’s population, it just won’t happen. 

You can push digital payments all you want, but when it comes to cash there are factors that need to be considered. Teenagers will always want to hide things from their parents, unfortunately, some people may want to hide things from their spouses. 

There are many reasons why people prefer using cash as a payment method. Ease, convenience, habit, budgeting, and privacy are certainly key drivers of its use. 

For businesses the message is simple. It’s crucial to provide customers with the way they want to pay. And for a lot of people that remains cash.

Image: PayComplete