Article

Dining in the cash-only heart of London

King Cash still reigns in Britain's seat of power.

June 12, 2013

By Mike Lee, CEO, ATMIA

If you walk past the British Houses of Parliament in the direction of London's Trafalgar Square, you will come across a quaint Italian restaurant called S.P.Q.R, situated at 43 Whitehall.

A visitor strolling through Westminster quickly realizes he's looking at the seat of power in the nation's capital. Here the lawmakers gather and, on the opposite side of the road, lies the elegant splendor of Westminster Abbey, where Queen Elizabeth II last week memorialized her 60th coronation anniversary.

But there's another kind of power that characterizes London as much as Westminster's famous legal, constitutional and spiritual seat of power. I'm talking about the power of money. This is especially true given that London is one of the top financial capitals of the world.

And this is where the Italian restaurant enters this little industry story I'm telling you. After the successful completion of European ATMs 2013, a joint annual event co-hosted by the ATM Industry Association and RBR, the association's president, Tom Harper, and I went out for a celebratory dinner. After all, the event had attracted a record number of more than 500 attendees, and was characterized by an excellent conference program, all accompanied by a full and lively exhibition hall.

Tom and I ended up at S.P.Q.R. To underscore the feeling that we were in an area renowned for British power, two tables away were Mr. and Mrs. John Prescott. Prescott was Britain's Deputy Prime Minister when Tony Blair led the nation.

View the European ATMs 2013 photo gallery

Having just delivered the penultimate presentation at the conference on the future of cash in a mobile-digital world, we noted the irony of the message emblazoned across the front of the outsize S.P.Q.R menus we were handed: "payment in cash or euros." The waiter assured us that there was an ATM next door, as well as one at the corner of Trafalgar Square.

In my presentation a couple of hours earlier, I'd argued that digital cash is the electronic copy of real, analog currency, which still plays a major role in the physical world we live in, and which enjoys an enviable degree of global public trust.

Now I was sitting down with Tom at a cash-only restaurant in the heart of London. It was as if we were receiving a confirmation from the heavens regarding the enduring power of cash in the real world, one part of which is the mobile-internet revolution I'd described in my presentation.

It was a delightful lesson in real-world power, given that my conclusion at the conference was as follows: "In the new mobile-digital world cash, e-cash, virtual currency and m-cash will be complementary money technologies linking the electronic world to the physical world and the digital economy to the real economy."

I'd also quoted RBR's latest forecast to 2017 for ATM cash withdrawal volumes: "RBR is forecasting that annual cash withdrawal volumes worldwide will grow by an average of 7.9 percent per year between 2011 and 2017 — well ahead of GDP growth over the same period. Cash in circulation ... does show that people have a lot of trust in physical money."

RBR's healthy forecast figure of 7.9 percent can be contextualized by comparing it to the average annual GDP per capita growth rate between 2003 and 2011 from the World Bank, namely a measly 1.5 percent, or the average annual GDP growth rate for the same period of 2.7 percent.

The co-existence between real cash, e-cash and m-cash is a complementary relationship analogous to that between physical books and e-books. Neither is better than the other. They are all brilliant technologies.

This relationship has been dramatically illustrated with the May 2 launch of the flagship Bitcoin ATM at the Hotel Del Coronado in San Diego. It links digital Bitcoin wallets with the real world of hard cash, and has cash in/cash out capabilities. The machine, working on a closed loop, has a 15-inch touch display, a QR code scanner, a card reader, a bulk note cash dispenser, a cash accepter and a thermal receipt printer.

Why would the developers of a well-known virtual currency turn to the high-street machinery of an ATM? It's because the ATM remains the only alternative to the branch for providing cash directly to consumers, and is therefore the core technology for the flow of the payments loop shown at left.

What the figure illustrates is that the flow of money value always goes back toward hard cash eventually. Money value is easily digitized into virtual currency, e-cash or m-cash.

But as the Bitcoin ATM shows, at some point that value will be converted back into real cash. The process of conversion of cash into digital versions and then back into physical cash is probably going to be a never-ending loop.

And it's a loop that London restaurants like S.P.Q.R, and their customers like John Prescott, readily understand. Soon or later, we all need to live in the real world, away from the electronic world that follows us around but which can never predominate over the physical, analogical world of continuous human experience.

The real seat of power might not be Westminster after all, but money, and the crown of money still sits, as it has done for 27 centuries, on the head of King Cash.

Michael Lee has been CEO of the ATM Industry Association since 2005. He founded the association's chapters in Europe, Asia, Africa and Australia. As a futurist, he founded the think tank, the Institute of Futurology, and is a blogger for the World Future Society. His book, "Knowing our Future — the startling case for futurology," has been published by Infinite Ideas and is available through Amazon. Michael also serves on the board of directors of the U.S.-based Benefit Corporation Standards Institute.

Read more about trends and statistics.

cover photo: patrickdonnelly.co.uk

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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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