Impact of ATMs on the Use of Cash

Abstract

This paper examines the role of cash usage in the development of payment media. For that purpose, the basic trends of change in payment media are scrutinized using European data. Although cash still clearly dominates in small retail payments, there has been a definite shift towards electronic payments in larger purchases and payment of wages and state benefits. At the same time, the distribution of cash has been moving from bank branches into ATMs. This paper focuses on the role of ATMs and ATM networks in dispensing cash. It is shown that ATMs have a very different effect on banks and consumers, which makes it difficult to predict future developments in ATM networks. During the past decade the number of ATMs has increased rapidly, but there are signs of saturation. The number of ATMs is not independent on the overall usage of cash in society. As for the use of cash, it also depends on choices that are made with respect to the ATMs, but demand for cash appears to be continuing to grow in absolute terms. To be able make predictions on the future course of development, we have to assess how such properties of cash as anonymity compare with speed and security. There has been no systematic assessment of this to date.

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