With about half to two-thirds of the $1.4 trillion in paper currency in circulation being used outside of the United States, according to the Federal Reserve, it’s clear that the demand for cash remains high despite today’s digital banking environment.
According to The Wall Street Journal, three banks oversee the majority of the global “bank notes” business, including Bank of America Corp., Bank of Ireland in Europe and United Overseas Bank Ltd. In Asia. Several larger European banks have scaled back or gotten out of the business of sending cash via commercial flights due to the logistical issues associated with it, the report added.
Despite the challenges linked to sending money overseas, $400 million worth of cash was secretly airlifted by the Obama administration to Iran earlier in the year, according to the newspaper.
Banks receive a fee based on the weight of the cash being moved, and even though Bank of America handles hundreds of millions of dollars per day, it only receives about two hundredths of a percentage point of the face value, sources told The Wall Street Journal. The sources also told the newspaper that shipping $100 million nets the company about $20,000, and Bank of America’s annual global revenue amounts to around $100 million a year.
While there is a contingent of people who solely use credit or debit cards and online wallets to make purchases, cash remains the most widely accepted method of payment and also accounts for the most transactions, by number, in many countries, according to the PYMNTS Global Cash Index.
The quarterly Index, which focuses on a specific section of the world and reports the historical changes in cash usage and presents projections on future cash use, reports that total cash use is increasing due to people spending more as a result of economic growth in most countries.