Cash is king – that has been the one constant factor in the world of payments as innovation and technology continually disrupts the sector. But for the first time ever, researchers found that cash no longer makes up the majority of transactions.
According to the Payments Council, the latest statistics show that while 52 percent of consumer transactions are fulfilled through cash, that figure decreases when B2B transactions are taken into account. Including B2B and institutional payments, just 48 percent of transactions are done with cash.
It marks the first time researchers did not find cash to be the majority vehicle for completed transactions.
Cash remains the dominant method of payment for individuals by far, ahead of debit cards, reports said. The demand for cash is strong, too, considering that the number of ATMs grew by 5.2 percent last year. Cash is the dominant form of payments in dollar stores and charity shops, which reports said have seen significant growth in the last few years, as well as in bars and clubs.
But B2B payments are often too large to conduct with cash, which explains why business payments take a hit to cash’s dominance.
Checks, on the other hand, have seen a steady decline in prominence, though B2B transactions largely keep them alive. For several years, however, experts have been forecasting a shift in B2B payments to the digital space, a trend that come to fruition through the rise in e-invoicing and digital procurement strategies.
In fact, recent results from the Association of Financial Professionals’ ePayments Survey revealed that nearly half (48 percent) of professionals said they were “very likely” to convert supplier payments by check into e-payments. The use of checks for B2B transactions has seen a steady decline from about 80 percent in 2004 to about 50 percent in 2013, the research showed.