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Visitors to London before the pandemic could not fail to notice that cash usage was already in decline, with some everyday locations, such as pubs and coffee shops, requiring customers to pay by card or phone even then. Now, as Britain marks the first anniversary of the original lockdown, it is clear that cash has taken a historic tumble, with figures from ATM operator Link showing that the value of cash withdrawn at its machines fell by 36 percent during what Link calls the "coronavirus year", with the number of transactions down by 43 percent. When customers use cash machines, the average withdrawal is up from a pre-pandemic level of £67 [$92] to £84 in 2021. Everyday reliance on cash may now be a thing of the past for many in Europe, but the atavistic attachment to currency as a store of value seems in no danger of losing its grip as several stories from around the world in recent weeks can attest: in the Eurozone countries, citizens appear to be hoarding cash, with an ECB survey recently finding that six percent of people in the currency union are holding on to at least €1,000 ($1,180) in the form of banknotes.
Having now established itself as the most valuable player to have graduated from Silicon Valley's intensely competitive start-up culture, payments innovator Stripe, now valued at $95 billion, is redoubling its efforts to embed itself into the payments ecosystem around the world, with renewed emphasis on Europe as it begins to recruit a thousand new staff members in its Dublin offices. The company, renowned for a merchant-centric focus that extends to even setting up companies for customers if desired, plans to profit from the fact that "regulatory complexity, a byzantine global financial system and a shortage of engineers are constraining the impact of the internet economy", which it feels is in its early days even now. Other global regions are not overlooked, with major deals struck in Africa and Australia in recent months. The high valuation signals a belief that the best is yet to come for the company as it extends its reach and rides a wave of change in online behaviour: in the words of the Financial Times, "Stripe's $95bn price tag heralds [an] internet shift from ads to commerce".
In India, an end-of-month licensing deadline is drawing near to operate new, for-profit mobile payments platforms (whether one or two has yet to be decided) that will co-exist with the incumbent interface, enabling payments by QR Code or P2P bank account transfers using the recipient phone number or state-issued identifier to direct the funds accurately. This is no small business: 2.3 billion transactions were recorded using the current platform in February 2021, with the merchant discount rate on transactions currently set at zero by the authorities to stimulate usage further. Six consortia are in the running for the new platform licence(s), with at least four of them bound to be disappointed: hats in the ring now include those of Amazon (in cooperation with Visa), Facebook and Google (in cooperation with Reliance), Paytm, Mastercard, FIS and a sixth consortium including India Post Payments Bank, with each bidder also involving local banks and fintechs from an already highly developed payments environment. "The greater the level of competition, the better", commented Lorna Baek of Argus Advisory Research. "The more rails and methods available to Indian payment firms and consumers, the larger the digital payments ecosphere can become, making it more profitable and accessible overall. It is also likely to increase innovation and efficiency."
To end, links to some other stories of interest this week...
Australia: Fresh inquiry possible into Apple, Google payment systems
UK: NatWest to overhaul retail business as it tackles fintech rivals
UK: Visa interchange rise for purchases from EU merchants
US: Revolut applies for bank charter
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