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ATM industry blasts report on debit card usage

Group charges report is biased against cash, but authors say it reflects payment alternatives.

December 6, 2010

The ATM Industry Association (ATMIA) has blasted a UK Payments Council report that said for the first time in United Kingdom history spending on debit cards has exceeded spending with cash.

The Payments Council, an organization that promotes an efficient payment system in England, Northern Ireland, Wales and Scotland, reported Friday that total debit card spending in the U.K. economy was 272 billion pounds (U.S. $363 billion) based on a rolling 12-month period that began Oct. 1, 2009, and ended Sept. 30, 2010. The Payment Council's data is based on information provided by The UK Cards Association, which monitors spending on plastic cards.

During the same one-year period, the cumulative amount of cash spent in the U.K. economy was 269 billion pounds (U.S.$359.8 billion), said Mark Bowerman, a spokesperson for the Payments Council, which is based in London.

Council officials said its report does not diminish the importance of cash. The study reflects consumers' growing use of alternative payments. "We've never hidden that cash is still (in volume terms) the dominant payment method, but cash use is not growing whilst debit card use is," said Sandra Quinn, the Payments Council's director of communications.

The Payments Council's findings, however, angered ATMIA, which represents ATM owners and operators. Association officials argued that the UK Payments Council report did not measure all of the instances in which cash is spent, a charge the council denies.

"The statement by the UK Payments Council issued to accompany findings of its Statistical Report Q3 uses unscientific anti-cash rhetoric rather than trying to present a contextualized argument to fully explain its statistics. There are a number of factors that should be considered before prematurely jumping to conclusions about the decline of cash," charged Flora Hamilton, executive director of ATMIA Europe, which is based in London.

Cash use strongly grew during the recession and the recent trend in cash withdrawals in the last quarter (third quarter of June, July and August) could be an indicator of a return to normalcy after an extraordinary increase, Hamilton said.

"One quarter's decline in cash withdrawals, especially when it follows a period of cash bounceback, is hardly a long-term decline in cash the UK Payments Council would have us believe," she added.

ATMs are responsible for 71 percent of cash circulation in the U.K. Link, the U.K. cash machine network, reported that there were 719 million cash withdrawals in 2010's third quarter compared with 738 million cash withdrawals in 2009's third quarter. Link noted there were fewer ATMs deployed in 2010's third quarter compared with the same three-month period last year. In this year's third quarter, there were 63,294 ATMs compared with 63,400 ATMs for the same three-month period in 2009.

Hamilton also took issue with the UK Payments Council's assertion that consumer fear of debt is fueling their increasing reliance on debit cards. "This merits further and deeper investigation to understand the real trends in these recent statistics," Hamilton said.

Ron Delnevo, chairman of ATMIA Europe, also expressed concerns about the UK Payments Council report.

"Put simply, the published figures understate cash usage," said Delnevo, managing director of Bank Machine Ltd., a Hatfield, Hertfordshire, England, ATM ISO owned by Cardtronics Inc. "Whilst every card transactions is of course recorded, the same is not true for every cash transaction. From every mini cab driver to market traders, babysitters to bar tips, cash keeps businesses moving. Industry experts suggest the cash figure is understated by up to 20 percent or 30 percent and the gap is growing."

Delnevo cited as an example Bank Machine's growth.

"At Bank Machine, our same store free-to-use transactions are 10 percent ahead of last year," he said. "We see no evidence of cash losing its popularity."

Bank Machine also continues to deploy ATMs that issue five-pound banknotes, Delnevo said. "We have over 100 now. Many of them are doubling their usual amounts of transactions, proving the public love of cash in convenient denominations and are wary of over-spending with plastic," he said.

The Bank of England, the nation's central bank, is promoting the dispensing of five-pound notes (U.S. $7.53) through ATMs. Before ATMs began dispensing five-pound notes, the 10-pound note (U.S. $15.10) was the smallest banknote ATMs dispensed in the United Kingdom.

The UK Payments Council study about the decline in cash spending is not true, Delnevo said.

"As usual, those who would benefit from a plastic-only society are pointing to a so-called decline and cite this as the first step towards a cashless society. The real facts are that this is neither true, nor desired by the British public," he said.

The Payments Council's Quinn said the report shows that consumers have more payment choices than they did years ago.

"As people have choices about the payment type to make — where years ago cash was the only option — they increasingly use their debit cards," said Quinn, who added the study includes low-value cash spending, such as tipping and buying newspapers and coffee.

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ATM Industry Association (ATMIA)

The ATM Industry Association, founded in 1997, is a global non-profit trade association with over 10,500 members in 65 countries. The membership base covers the full range of this worldwide industry comprising over 2.2 million installed ATMs.

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