Card issuers were telling customers to use ATMs and grab cash. In-store and online shopping ground to a halt. Irritated customers at convenience stores, supermarkets, retail stores and banks voiced their frustrations on social media until the outage issue ended over five hours later.
While the payments chaos was short lived, it demonstrated the fragility of digital payments, and showcased in stark relief the risk inherent in a digital-only, cashless society. The digitization of payments is not fool proof and cash-based payments are critical, even for digital-first consumers, when the digital gears stop moving.
AsCardtronics’ 2017 Health of Cash Studymade clear, nine out of 10 consumers favor the ability to pay with cash and other payment methods, and prefer cash for low-value purchases. More than three in five disapprove when cash isn’t accepted. Other data verify the sustainability of cash. The G4S Cash Report 2018reports that cash in circulation relative to GDP increased 9.6 percent across all continents between 2011 and 2016. In Europe, 80 percent of POS transactions are conducted in cash; while in North America, cash use accounts for 31 percent. In Asia, while online purchases have risen, 3 out of every 4 are paid for by cash on delivery.
After the Visa incident, consumers were advised to rely on multiple payment methods should an emergency such as the Visa outage arise, and this advice is consistent with that of personal finance experts. A payments mix is essential for emergencies, whether caused by the payments networks themselves, Mother Nature, or anything in between.
Personal finance expert Paul Lewis encouragesthat consumers, “carry two or three cards, on different networks and providers, and also some cash for your immediate needs.” (And it seems many consumers are taking Paul’s advice – the 2017 Health of Cash Studyfound that 85 percent of all consumers always try to keep cash on hand, and two-thirds say they feel nervous when they don’t have cash with them – even among millennials, with 70% agreeing to this.
And while no payment method surpasses cash for emergency situations, cash is an essential payment form with many benefits for our day-to-day lives. As shown in our Health of Cash Study, cash continues to be a preferred payment method for consumers for many reasons, including:
Convenience: Consumers prefer to use cash for smaller item purchases, with 68 percent using cash for purchases under $10, and 59 percent using cash at convenience stores. Cash also leads when making many service payments - from paying a babysitter (67 percent prefer using cash) or lawn service (46 percent chose cash) to buying coffee and snacks (54 percent prefer cash).
Resilience: Across in-store shopping and person-to-person payments, cash remains the most common form of payment - used by nine of 10 consumers in the six months prior to the study.
Security: 85 percent of consumers say cash makes them feel secure, versus 64 percent who say the same for credit cards and 67 percent for debit cards.
Financial well-being: Three-fourths of consumers say cash help them control spending, and nearly half consider cash the single-best payment method to stop them from overspending.
The recent Visa incident is a perfect example of the importance of payment diversity, whether you prefer card payments, mobile payments, or reliable cash.