Cash payments accounted for 78% of Europe’s 388 billion retail payment transactions in 2008, according to a new study by Retail Banking Research (RBR), and the cost of distributing, managing, handling, processing and recycling cash and of accepting cash payments came to a total of €84 billion. That’s the equivalent of 0.6% of Europe’s GDP or €130 per person, say the researchers.
The number of cash payments is forecast to fall by 2.3% per year in Europe up to 2014. However, despite this slow decline, cash will remain the predominant payment method for some years to come and, in 2014, will still represent 63% of the continent’s 414 billion payments.
‘The Future of Cash and Payments‘ argues that previous attempts to justify the economics of cash substitution in Europe are no longer relevant and advocates a new approach based upon establishing the business case for different players in the payments market, especially for retailers who ultimately decide which payment methods to accept and incentivise, and who provide much of the infrastructure for accepting payments.
Contactless cards and mobile phones offer a large opportunity for increasing the number of cashless payments, the researchers conclude, and they expect to see a significant increase in the use of contactless cards in countries such as France and the UK from 2010 onwards.