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Bank of England’s (BOE) Chief Cashier Victoria Cleland adamantly stating that “cash is not in decline.”

Cleland made the remarks at the Future of Cash Conference in Vienna, Austria, on Oct. 5, continuing the argument that, despite the fact that non-cash purchases and transactions are on the rise in the U.K., the amount of currency being circulated in England’s economy is also increasing.

“Very notable in the U.K. is the rise in the use of contactless cards, which tripled in 2016, accounting for 7 percent of payments. The shift in consumer preferences is also evident in online spending, where average weekly online shopping in the U.K. was £1.1 billion in August 2017; an increase of 16 percent compared with August 2016. Such developments have led many commentators to predict the demise of cash,” she said.

“But the numbers show a different story,” Cleland continued. “In 2016, the value of Bank of England notes in circulation increased by 10 percent, reaching over £70 billion in the run-up to Christmas: the fastest growth in a decade. Cash remains the most widely used payment method in the U.K. It accounted for 40 percent of all payments and 44 percent of payments made by consumers in 2016.”  

From BOE’s Victoria Cleland: UK Pound Usage Grows | PYMNTS.com

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Well, this was fun. The BBC2 series “Billion Dollar Deals” had an episode on the “War on Cash”. As you might imagine, the reason I mention this is because I was on it, gratifyingly labelled a “Digital Money Expert”.

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European Banking Authority should require banks provide evidence that a customer was aware of the nature of the transaction and gave informed consent before they can hold the customer liable.

From Liability for push payment fraud pushed onto the victims – Bentham’s Gaze

Having worked on a European project about means of establishing informed consent, I can assure you that this is a non-starter.

The British interior minister (“Home Secretary”, as we call them) is the historian Amber Rudd, famous for being the “aristocracy co-ordinator” for the inexplicably popular film “Four Weddings and a Funeral”. She has been attracting headlines.

Amber Rudd Says She Doesn’t Need To “Understand How Encryption Works” To Know It Needs Changing

From Amber Rudd Says She Doesn’t Need To “Understand How Encryption Works” To Know It Needs Changing

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Rudd replied: “I don’t need to understand how encryption works to understand how it’s helping, end-to-end encryption, the criminals.”

From Amber Rudd Says She Doesn’t Need To “Understand How Encryption Works” To Know It Needs Changing

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That said, there does still seem to be a lot of cash used for potentially dodgy purposes (e.g. drug deals or tax evasion purposes). While the RBA doesn’t have any direct data, its damaged banknote facility has uncovered multiple examples of huge cash piles in excess of $20,000.

From $100 notes: the heart of the black economy? – MacroBusiness

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One possibility is the break-up, or unbundling, of banking services. In the future, we might keep minimal balances for payment services on electronic wallets.

The remaining balances may be kept in mutual funds, or invested in peer-to-peer lending platforms

From IMF Head Foresees the End of Banking and the Triumph of Cryptocurrency – Foundation for Economic Education – Working for a free and prosperous world

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People in China simply aren’t interested in bitcoin’s potential for political change… Ordinary Chinese bitcoin users I spoke to are far more interested in the ability to speculate on bitcoin’s wild price swings—it’s just another way to make money as China continues to adopt characteristics of a market economy.

From Why China dominates bitcoin and how it may control the blockchain technology behind it — Quartz

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Paul Volcker, of the U.S. Federal Reserve fame, even considered it [the ATM] the “only useful innovation in banking.”

From A Brief History of the ATM – The Atlantic

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“I don’t mess with Venmo because I don’t trust it,” he said.

That view echoed what someone said on this panel last year when it was comprised of young college students. Trust can be an important factor when choosing which products consumers use day to day.

From Is Zelle finding a groove with bank customers over Venmo? | Mobile Payments Today

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Although it will be a while until we get the 2017 figures, the 2016 figures were unequivocal. Card fraud is worse than ever, and in the UK it’s now worse than when chip and PIN was introduced.

Card fraud losses for 19 European countries hit approximately €1.8 billion, a new high. The UK saw the highest losses at £618 million, a 9 percent rise over 2015, topping the previous peak in card fraud, set in 2008 after the introduction of chip and PIN.

From European Card Fraud for 19 Countries Hit Record €1.8B in 2016 | FICO®

We’re fighting with the French for top spot in the European Champions League of Card Fraud. Who’s in front depends on how you measure things. Our fraud is  high, largely because of our very high Card Not Present (CNP) fraud which is running at more than 12 basis points. So we have higher absolute losses but their overall loss is worse in proportion. Of course, it isn’t just a European problem.

Fraud, grew by 19%, and outpaced volume, which grew by 15%.

From Annual Global Card Fraud to More Than Double Reaching Over $35 Billion in Four Years

My general sense of the industry, without giving away anyone’s figures, is that not only is fraud growing faster than volume, but that merchants are getting annoyed because declines are growing even faster than fraud. (We need a sea change in tackling fraud and I think there are two parts to this: changing the security vs. convenience model at the front end and changing the transaction validations model at the back end.) Actually, merchants are annoyed not only because of declines.

As e-commerce merchants continue to invest in fraud prevention, those efforts cost, on average, 8 percent of their annual revenue, up from 7.6 percent last year, according to a new report… undertaken by Javelin Strategy & Research

From Fraud Prevention Costs Merchants 8% of Annual Revenue: Report – CardNotPresent.com

It’s actually nearer 10% for online-only merchants. This seems unsustainable to me, but remember I don’t understand the dynamics in the retail sector. If a lot of those online-only merchants are (just as an example) adult services then they may consider that losing a tenth of the revenue is perfectly acceptable. But surely for the typical online merchant it is impossible to continue with these costs. You do have to wonder just how long the cost of fraud can continue to rise, considering that the report also says the merchants are already devoting a fifth of their budgets to fraud prevention.

The card schemes are hoping to see their solution (3D Secure v2) taken up by European merchants in the spring and I’m sure that this will help. But what we really need to do is to roll out what we already know to be a successful roadmap: tokenisation, biometric authentication and a useable customer interface. When I buy a bus ticket on my phone, I pay using Apple Pay which delivers all of these: the W3C “payment request” initiative (already being implemented in the main web browsers) provides a means to extend this solution to the web. Let’s get on with this in the UK and leave the fraud trophy to the French!