The cost of cash

The cost of cash is an interesting driver in the banks and card associations drive to remove as much of it from the financial system.

However, to the average consumer and many small merchants it is still the easiest and cheapest method of payment. I walk in, I want goods, I purchase goods and leave with goods. No connection to the perceived ‘financial network'. In short, many consumers and small merchants understand that there are fees to be paid on a card based transaction but that with cash there are none. At least to them.

But the cost of cash is heavy, so heavy in fact that: “In the UK banks are incentivising big retailers such as Tesco and Sainsbury's to push cash back into the system via ‘cash back',” says Heikki Huomo, VP, market sector NFC, NXP at the recent WiMA show in Monaco.

“This is because otherwise they (the banks) have to count the cash on site, transport it to their bank, count it again and then deliver it back to its ATM network so that their customers have access to the cash. In many instances these ATM's are found just outside Tier 1 retailers like Tesco. This cost is so great that the banks are offering a decent percentage of any ‘cash back' which is pushed back into the system at POS.”