Total cash volume used in POS transactions fell by 10 percent from 2012 – 2013, while mobile payments and prepaid card use saw an upsurge. That’s according to the new Javelin report, “2014 Retail Point of Sale Payment Forecast: The Mobile Payment Square-Effect and Prepaid Card Popularity Drive Cash Down by 10%.”
The data indicates traditional paper-based payments, including cash and check, are increasingly losing out to alternative payments. In fact, cash payments at POS terminals totaled $788 billion in 2013. That’s down $86 billion from the previous year. Javelin predicts that total to drop to $711 billion by 2019, amounting to $100 billion in total sale volume loss over the next five years.
Even so, cash remains the most commonly used payment option for in-store purchases. Specifically, the report found 65 percent of all consumers used cash to make a purchase in the seven days prior to the report’s release. Further, debit and credit continue to dominate overall POS spending. However, increased affordability of mobile readers will likely bring further change to these facts and figures.
"For years, many small merchants have been unable to accept electronic payments due to high processing costs or an inability to support a traditional terminal,” Nick Holland, payments senior analyst for Javelin, said in a press release. However, with cost-effective options, such as mobile card readers offered by entities like Square, Intuit, and PayPal, more small merchants can now accept electronic payments. In light of this, Javelin forecasts cash's dominance to be worn away even further in the coming years.
Javelin’s findings are in line with ABI Research’s data on mobile POS terminals. ABI predicts the installed base of mobile POS devices will increase fivefold, reaching 51 million by 2019. That will amount to 46 percent of the overall POS market. With continuing growth in mobile payment readers at the POS, it’s important to make sure your financial institution continually works to remain competitive in the world of emerging payments technology.