Nearly every conversation we have with clients and partners at some point turns to the question of the future of cash. It is a constant question in the cash community, whether it is in private, as part of strategy setting, or at conferences. Often, we find that the discussion turns to a number of things:
- What are the historical trends in cash usage
- What policy and commercial settings are in place and how do they influence decisions
- What advocacy is needed to support cash
All of this is helpful. We want to add to the way that the future of cash is thought about, discussed, and acted on. To this end, we have used a “PESTLE analysis” to begin identifying key themes. This type of analysis is useful to pull apart macro-environmental issues, and so is effective at a system level. The next steps are to contextualise at country levels and to look at relationships between drivers. As we continue to develop our analysis we would welcome discussion and feedback.
Cheat notes on PESTLE
PESTLE analysis was created over 60 years ago, and can be used in practically any industry or geography to frame understanding. It considers six broad categories: political, economic, social, technological, legal and environmental. PESTLE should be seen for what it is, a high level, system or industry oriented tool that raises issues and points to combinations of decisions and further research/analysis.
A PESTLE analysis for cash systems
We have structured this analysis by identifying some of the broad considerations under each category, and then providing discussion on specific examples.
Political
Key considerations include:
- Government regulatory stance on cash. Does the government have any particular policy around cash or related issues (for example: branch banking, financial inclusion or social access to payments). Are there political drivers toward an active stance, and is it positive or negative?
- What influence does the central bank and any other bank regulator have on policy settings and implementation? The central bank is typically responsible for note issuance and oversight of cash distribution. What position are they taking on future cash needs in society? Further, many central banks are actively exploring or pursuing central bank digital currencies – does this compliment or conflict with their stance on cash?
- What geopolitical risks exist and how do they influence decisions at a regulatory level through to individual consumer level?
Examples of framing the political view:
- Poland. The Polish central bank, Narodwy Bank Polski, released its “National Strategy for Cash Circulation Security” in 2021. The strategy lays out a series of objectives, which have been followed with ongoing working groups, seeking and expecting cooperation from the key participants in the cash system.
- India. The Reserve Bank of India is taking a notably mixed role. Recognising that cash usage in India continues to be high and plays an important societal role, they have also identified digital payments as important for the evolution of the Indian economy in their “Payments Vision 2025” strategy
- CBDCs. According to the CBDC tracker, at February 2025 some 168 countries have been working on CBDC projects in some form, including 4 with active CBDCs, 28 with CBDC pilots (inc the Euro area), and 30 with proof of concept projects
Economic
Key considerations include:
- Cash demand and usage trends. What are the short and long term trends. Underlying this, what have influenced those trends, what is happening in the broader payments space, and how do activity levels relate to infrastructure?
- What are ATM and branch networks doing? Are they shrinking, growing or stable? Is there change in the national ATM fleet – moving away from or toward independent operators and/or surcharges for cash withdrawals?
- What is the cost of the overall cash infrastructure and how does it translate to a unit cost for cash usage?
- Is there a trend around cash acceptance by retailers?
- How are broader economic conditions (inflation and interest rates, cost of living, unemployment, economic growth) influencing spending habits and payment habits?
Examples of framing the economic view:
- Netherlands. Cash usage has declined to particularly low levels, estimated at 9% of point of sale payments in 2024. This change in usage has been reflected in the national ATM fleet. While Geldmaat has been a strong initiative to support sustainability of the cash cycle, in 2024 the Geldmaat ATM fleet reduced by nearly 900 devices. This change reflects the challenge of continuing to support the cash cycle in a low-usage environment
- Australia. The recent merger of the two largest cash-in-transit operators highlighted the heavy infrastructure cost of the cash system. The submissions made to the competition regulator through the merger process consistently identified the duplication of cost, the effect of a high fixed or sticky variable cost on unit prices, and the challenge this represents for sustainability of the cash cycle
Social
Key considerations include:
- What level of reliance on cash exists in society?
- What level of preference for cash exists in society?
- What demographic changes are taking place and what is the demographic profile? This might consider age, socioeconomic status and income levels, migration trends, language ability, and financial literacy
- What attitudes to cash exist in society? For example, are there prevailing views related to privacy, the security of banks, crime, fraud risks, etc
Examples of framing the social view:
- Sweden. Often identified as the leading economy for the shift away from cash, Sweden has very low levels of cash usage. However, there are a growing proportion of Swedes who are expressing concern with the decline in cash use and availability. Further, some 56% of Swedes indicated that their reduced cash usage was because retailers stopped accepting cash – which points to a reverse flywheel associated with the cash cycle
- Philippines. Cash continues to be the dominant form of payment in the Philippines, coming from a number of drivers including financial literacy, access to banking services, and trust in cash compared to other payment forms. That said, there is growing adoption of card payments and in particular digital wallets. GCash, the most popular digital wallet in the Philippines, is an innovative pathway for consumers to access digital payments, with a growing number of outlets that allow consumers to pay cash into their digital wallets
Technological
Key considerations include:
- What developments in payment technology are gaining traction and adoption, and which have future potential growth? Cash is a payment instrument, and therefore competing payment instruments play a significant role
- What are the relative strengths and weaknesses of competing payment technologies alongside cash?
- What cash technology advances exist (including hardware and software, banknote technology, system integrations, etc), that can reduce cash cycle costs and improve the performance of the cash cycle?
Examples of framing the technological view:
- USA and Europe. Front and back of house retail cash technology continues to gain traction. This trend recognises the relative cost of labour and cash logistics in the cash cycle, and therefore aims to (a) reduce variable costs associated with cash, and (b) improve labour productivity in retail locations. A growing number of providers wrap additional services around this technology, such as ‘same day value’/provision credit, and commercial structures that replicate traditional card payment commercials
- Malaysia. Malaysia’s PayNet realtime payments network has seen growing adoption, with strong consumer payment overlays using DuitNow (a QR-based payment method). Growth has been significant, and some 64% of Malaysians are understood to use digital wallets
Legal
Key considerations include:
- Cash acceptance laws. Are there laws in place that mandate businesses accepting cash as a form of payment
- How do financial crime laws and regulations (including AML/CTF) affect payment choices and obligations?
- What laws and regulations affect cash cycle operators, including payment regulations, cash access obligations for banks, security regulations for cash in transit operators?
Examples of framing the legal view:
- Slovakia. In June 2023, Slovakia amended its constitution to mandate the rights of consumers to pay for goods and services in cash, specifically saying, “everyone has the right to pay for the purchase of goods and services in cash as legal tender, and the acceptance of such payment may be refused only for reasonable or generally applicable reasons.”
- Global. Most countries have adopted AML/CTF and other financial crime laws with a particular lens on cash. This includes restricting the maximum amount that can be paid in cash (considered in Australia and Europe), reporting obligations on banks and other cash system participants around transaction thresholds and suspicious activity, and know-your-customer obligations
Environmental
Key considerations include:
- What is the carbon footprint of each component of the cash infrastructure, and how can it be managed down? How does it compare to other payment infrastructures?
- How sustainable are banknotes, and to what extent are returned notes recycled?
Examples of framing the environmental view:
- Europe: In the cash logistics sector, both Loomis and Prosegur are executing initiatives to reduce the carbon footprint of their vehicle fleet, including deployment of lighter-frame vehicles which use less fuel along with rolling out a growing fleet of electric vehicles. Cash logistics has historically been a particularly carbon-intensive operation due to vehicles often being fully armoured – therefore requiring relatively high amounts of fuel per distance travelled
- Australia: The Reserve Bank of Australia (RBA) was one of the leading innovators in moving to polymer banknotes, first issued in 1988. The move away from paper to polymer meant a significant increase in the useful life of notes, reducing production intensity and improving durability. Further, the RBA recycles all old polymer notes that are returned, reducing them to usable pellets that can be manufactured into plastic products
The purpose of continued development of this framework is to support consideration of all influences on the future of cash. Because cash systems are complex in their own right, and dependent on other complex systems, deepening understanding is key to inform decision making, whether that is at a policy level by governments and regulators, or at an operator level in relation to operating models and capital investment.
Questions? Reach out.