what do we know about cash payments? iaca’s global payments survey project

What do we know about cash payments?

IACA’s Global Payments Survey Project

Third International ConferenceCash Circulation: Models, Standards, Tendencies

Moscow, November 2009Eugenie Foster

Agenda• The International Association of Currency

Affairs (IACA) Global Payments Survey Project

• Literature review• Forecasts• Central Bank Forum on Payment Surveys

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IACA

• IACA: International Association of Currency Affairs– Not for profit organization that provides

opportunities for stakeholders in the cash cycle to share information and collaborate

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GPSP

• Global Payment Survey Project:– Cash cycle stakeholders need robust and

unbiased payments data– IACA is working to develop an overview of

global payments trends, with emphasis on cash payments data

– IACA’s view of the issue is international

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Existing Payments Data• Central banks collect extensive data series

on noncash instruments• There are no standard data series for cash,

so central banks survey or model to estimate cash payments

• Retail, banking, payment card, post, and other national organizations may collect payment data and/or conduct surveys

• Commercial organizations that collect payment data generally do not publish widely. Their surveys may be less robust than the central banks’

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GPSP literature review

• IACA funded a review of payments research published by central banks and other significant national organizations

• Emphasis is on the period after 2003, with several earlier studies that had wide influence

• Data reported here comes from central bank literature unless otherwise identified

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LITERATURE REVIEW RESULTS

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TRENDS

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Payment SurveysCountry Date (s) Scope Methodology

Australia 2007 Individual payment habits Consumer diary

Austria 96, 00, 05 Household payment habits Consumer diaries

Belgium 2003 Payment system review Consumer telephone survey

Canada 20042006

Consumer attitudes about cash useMerchant survey

Telephone surveyTelephone survey

Finland 2006 Consumer payment habits Mail survey

France Telecom 2005 Payment instruments and demographics

Consumer diary

Germany 2008 Individuals payment habits Consumer interviews and diary

Netherlands 2004 Payment preference Household internet questionnaire

Norway 2006 Financial institution, merchants, households

Consumer telephone survey

Poland 2008 E-commerce payments Online-merchants questionnaire

Portugal 2005 Financial institutions, merchants, households

Household survey

Sweden 2006 Quality and use of cash and cards Consumer telephone survey

USA 01, 04, 06 Noncash and electronic payments Financial institution surveys and data surveys

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Retail Payments Trends

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Austria

Eugenie Foster LLC 11Source: Oesterreichische Nationalbank11/17/2009

Austria

Eugenie Foster LLC 12Source: Oesterreichische Nationalbank11/17/2009

Austria

Eugenie Foster LLC 13Source: Oesterreichische Nationalbank11/17/2009

United States Consumer Preferences

Eugenie Foster LLC 14Source: BAI/Hitachi11/17/2009

Australia

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COSTS

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Cost AnalysesCountry Date Cash Credit Debit Break-even,

cash/debitE-purse

Australia2006 A$0.28

to 1.42A$0.80 To 4.76

A$0.50To 0.73

Belgium 2003 €0.53 €2.62 €0.55 €10.24 €0.54

Canada 2006 $0.25 $0.82 $0.19 approx. $12

Finland 2008 €0.30 €0.26 approx. €15

Netherlands 2005 €0.30 €3.59 €0.49 €11.63 €0.93

Norway 2009 NOK 1.8

NOK 5.9

Portugal 2005 €1.85 €2.44 €0.23

Sweden 2002 €0.52 €0.50 €0.34 €7.8

USA 2006 $0.80 to 1.11

$0.25 to 0.90

$0.70 to $1.04

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Belgium: Breakeven Points

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CONSUMER PREFERENCES

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Reasons for using cash

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Reasons for using cards

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FORECASTS

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Cash Payment Forecasts

Country Date Forecast share of cash payments

Intervention

Austria 2015 77% No

Finland 2010 25 to 30% No

Netherlands 2015 20% No

Norway 2015 5% to 15% Yes

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Payments Timeline

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Russia

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Source: Central Bank of the Russian Federation

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Non Cash Transactions

Eugenie Foster LLC 26Capgemini World Payments Report 200911/17/2009

Currency in CirculationUnited States Russia

Eugenie Foster LLC 27Source: Board of Governors of the Federal Reserve System Source: Central Bank of the Russian Federation

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OBSERVATIONS

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Literature Review Observations • More than 13 central banks and national

organizations have published results of payments surveys since 2003

• There are no agreed methodologies for payment surveys

• While specific details vary by country, the general retail payments trends are moving in similar directions

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What the research says about the future of cash

• No other payment instrument provides all of the functionality of cash

• Cash demand and use for payments will continue for the foreseeable future

• Currency in circulation will grow (or contract) with the economy

• Currency will be used for small value payments and as a store of value

• Debit card use is the strongest growth trend• Other payment instruments may emerge

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CENTRAL BANK FORUM ON PAYMENT SURVEYS

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Central Bank Forum on Payment Surveys

• In March 2008, IACA hosted economists and cash experts from 8 central banks to share their experiences with consumer payments surveys

• Presentations on 5 surveys• Participants agreed on the value of

exchanging views• Identified a glossary of payment survey terms

as a first step Eugenie Foster LLC 3211/17/2009

GPSP Next Steps

– IACA is funding development of a glossary of payment survey terms

– IACA will continue to host central bank dialogue on payment surveys

• Proposed second Central Bank Forum on Payment Surveys in May 2010 in Buenos Aires, Argentina

• Forum focus will be on the glossary and standards for future payment surveys

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THANK YOU FOR YOUR ATTENTION

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