The 2018 National Payments System Report is out and there are always some interesting takeaways from such documents.
One thing we picked up is that the trends seemed to suggest a slowdown in most forms of transactions which were not cash-based and that got us thinking; could it have been that people are responding to the 2% tax by going back to cash or maybe the cash in circulation has just increased. After taking a closer look at the number it seems that banks started raising withdrawal limits towards year end and this is an interesting trend once you consider that consumers have taxes and multi-tier pricing to deal with.
Cash and ATM transactions followed an interesting pattern since the 2nd Quarter of 2018 until the end of the year:
Using this data, the average amount withdrawn per transaction in the 2nd quarter was $133.26 compared to $160.08 by the end of the year. Even judging by the eye test, I think it’s fair to agree that as last year progressed the cash situation got better whilst other aspects of the economy started crumbling.
What could this mean?
There are two outcomes that are easy to deduce;
- Either banks started giving out more or;
- People stopped standing in line and queuing for money at the banks
It’s more likely that the former occurred because if people had stopped queuing then it’s more likely that the number of internet and mobile transactions would not have fallen during the period we are reviewing. The volumes of mobile and internet transactions fell by 8% and 16% respectively and the value of these transactions dropped by 0.5% and 9%.
What does the future hold?
If this trend continues to improve it will be interesting to see if people start reverting back to cash over digital transactions. Even before the 2% tax and multi-tier pricing ban charges were too aggressive and now that there’s an even worse reality on the ground I would like to believe that if cash in circulation increases people will go back to using cash instantly. Yes, cash comes with some risks but once you consider all the downsides to transacting digitally, people will be itching for cheaper alternatives and it seems one might be steadily presenting itself.