The European Institutions

In the last Newsletter (Issue 73, June 2014), we presented the result of the European Election and the chart of their likely breakdown among the political groups. The final repartition between groups was only marginally different and can be found here.

The first test of the new Parliament will be the election of the proposed college for the Junker Commission presented by the President- elect to the Council. The college still counts 28 Commissioners (one per country) contrary to the provision of the Lisbon Treaty which proposed a reduction to 14 Commissioners. However, for the first time ever, a hierarchical structure has been put in place with the team, with an effective deputy president (the Dutch “First Vice President” Frans Timmermans). The Commission work will be organized around “priority projects” lead by 6 Vice presidents to whom the other Commissioners will report.

The commission was presented as a “strong team”, with 5 former Prime ministers and 19 former ministers. Only 7 Members of the Barroso Commission remain in the new College, including the German Öttinger, the Austrian Hahn, and the Finn Katainen (who only joined the Commission in July 2014 to replace Olli Rehn).

The objective of the Junker commission will be to be:

“bigger and more ambitious on big things, and smaller and more modest on small things”. A strong emphasis is given on better Regulation and Junker has promised a bond fire of “unnecessary” legislative proposals currently in the pipeline.

Of specific relevance to ESTA are in particular:
• VP for the Euro and social dialogue: Valdis Dombrovskis (Latvia),
• Internal Market and Industry, entrepreuneurship and SMEs: VP Andrus Ansip (Estonia) and Elzebieta Bienkowska (Poland) specifically responsible for internal market;
• Employment social affairs and labour mobility: Larianne Thyseen (Belgium)

The list of Commissioners with their portfolios can be found here

Hearing of the new Commission in their relevant Parliamentary Committees has taken place early in October 2014. The EP will then vote on the entire College (the Parliament can only accept or reject the college as a whole).

Commission work on 1&2c € coins

The commission (DG ECFIN) has invited ESTA and a number of other organizations (EVA, Scan Coin) together with NCBs and the ECB for a meeting to discuss the issue of the future of 1 and 2 cents coins, further to an impact assessment study conducted by the Mint group in relation to their continuation, particularly envisaging their issuance at a lower cost. Two members of ESTA’s Cash Group joined the meeting: Prosegur and BDGW.
These coins represent 46 to 47% of all coins in circulation, yet a small portion of the total value of coins. A number of Member States have voiced their preference for an elimination of these coins, though the Commission assured the audience that no such proposal is on the table for the moment and the purpose of the meeting was to assess to reduce their cost, not to discuss whether they should go or not.
The discussion took place on the basis of a study prepare by Austria Mint. During the discussion, all options which would have as a consequence a change of size, weight and/or conductivity of coins which would affect the operation of either sorting and vending machines were generally opposed by the industry.
The meeting did not aim to be conclusive and therefore no decision was adopted. Based on the discussion, the Mint Group will update its study on cost reduction possibilities. The main outcome of the meeting was that the emphasis, stressed notably by ESTA, has shifted from a mere production costs to a full life cycle assessment of these coins, including transportation, shelf life, coins management and processing, which should be reflected in the next version of the study.

Cash use continues to represent a major part of all payments.

Young people and cash

It is well known that one should not believe everything that can be read in papers. This principle found a new illustration in August when a survey in the US revealed that a slight majority (51%) of adult American up to the age of 30 preferred using cards for payments as low as $5. The conclusion drawn from the survey is that the American society is moving from cash to cards. The fact that the survey was commissioned by CreditCards.com probably explains the self-serving outcome of the survey.
The Federal reserve however in its June study “Consumer Preference and the Use of Cash” showed the contrary: young people are more likely to use cash. ¹According to the report, 40% of 18–24 year olds prefer cash to other payment methods, compared to only 25% of people aged 65 and over.

Cash use and cards competition

The research from the Federal Reserved mentioned earlier showed that cash is half of the payment in the US: it shows that card transactions still outnumbered cards payments, and nearly 60% of payment of less than $25 are made in cash (2012).
A research in the UK² confirms the same kind of findings: cash represents 53 %of retails payment in 2013.
There are further interesting findings in this research: the survey shows that cash transactions only represented 9% of transaction costs by retailers (compared to a massive 85% of their transaction costs from the 42% card transactions).
The number of cards in use is growing rapidly with an expected 10.8 billion cards in circulation worldwide at the end of 2013, with an increase of 11% compared to 2012³. The number of cards is expected to continue to grow and the potential for it remains high.
It shows however that the growth of cards is not taking place at the detriment of cash, as the total number of payments also increases in most countries (the UK being possibly an exception).

¹Although some methodological bias may also explain the result obtained by the CreditCard.com survey, not least that its research only interviewed card owners, when the Fed surveyed a representative sample of young people: see “Young American Hate Cash… or do they ?”Currency News Volume 12 – Issue 9 of September 2014     ²British Retail Consortium, Retail Payment Survey 2013     ³Global Payments Cards Data Forecasts : 2013-2019, Currency News August 2014  

A French Tax Payer Pays taxes in 1,2 and 5 cents coins.

The French news reported on 16 September that a taxpayer, who was denied delay to pay her 1200 euros of annual income tax, has paid as a protest the last part of her tax bill (207 euros) in cash at the desk using only 1, 2 and 5 cents coins. She came with bags totalizing 38 kilogrammes and it took reportedly a couple of hours for 7 officials to count the coins and check the amount. The anecdote has it that they were not happy.
Next time, they may be well inspired of calling a professional cash processor for the counting and checking of the coins.

 

Card Fraud: study shows that one in four customers is victim of card fraud

There is a wide coverage in the media that card fraud is particularly prone to fraud. A recent study over 20 countries showed that 25% of consumers have been victim of card fraud within the last 5 years and for 10 % of them, more than just only once. The study also shows that consumers victim of fraud also tend to use their cards less afterwards or in 23% of the cases, change their financial institution shortly after.
A study from Euromonitor has shown that card fraud losses in 2013 for 19 European countries⁴ reviewed picked at €1.55 bn, with France and the UK totalizing 62% of all total fraud losses recorded for the 19 countries. This is the highest peak since 2008.
The risk of fraud losses is highest in France, Greece and the UK, but fraud losses have increased 28% in Russia in 2013 compared to the year before. In 10 of the 19 countries reviewed, fraud losses has increased compare to 2012, whist in the other 9 is has remained stable or has reduced
In this context, the rapid development of mobile payment devises should also raise some concerns to consumers. The risk is partly the same risk that laptops and PCs face, e.g. malicious apps, viruses and other types of malware and intrusions, without however, protection devices as developed for mobile devices than they are for PCs and laptop.

⁴17 EU Member States + Russia and Ukraine

ECB News heading

Cash in circulation (ECB)

This is the latest information published by the European Central Bank showing cash in circulation.

The total number of Euro banknotes in circulation at the end of July 2014 stood at 16,589 million, with a value of €969.5 billion, an increase of 1.9% in volume of 1.6% in value compared to May 2014.

The total number of Euro coins in circulation end of July 2014 grew to 109,053 million, while their value increased to €24,701 million, an increase of 1.2% in volume and 1.3% in value compared to May 2014.

Click on graph to access detailed info on low and high denomination banknotes and coins.

Banknotes



Euro coins

Click on the graphs

Online training material for the Euro banknotes

The ECB has provided training material on the euro banknotes, including the Europa series, on its website, responding to a growing demand for online material by cash professionals. This material can be accessed though a single web page www.ecb.europa.eu/euro/cashprof/trainingmat/html/index.en.html. The material provided includes 3 sets of training: slides presentations with detailed information on security features of the two news Europa Series, “knowledge of banknotes”, which is a e-learning tool targeting the professional dealing with banknotes on a daily basis and a “Eurocash Academy” for the general public (the latter being available in all EU languages whilst the former two are only available in English).

In addition to this material, EU leaflets are available at the ECB web and www.newfaceoftheeuro.eu. For any question, Vicente Ventura of the ECB can be contacted on +49 69 1344 7876 or vicente.ventura@ecb.europa.eu

 

Bank of England commissions a new independent study on the safe handling of banknotes protection chemical.

Further to an external review of contaminated banknotes, the Bank of England has published a summary of its finding concerning a list of hazardous chemical substances which should be excluded from banknote protection systems. The findings can be found here.

 

ESTA News

ESTA’s guidance on selection criteria for CIT and CMC suppliers

ESTA has produced a guidance document to customers for selection of cash service providers, distinguishing mere CIT providers (which includes ATM replenishment with or without secure engineering, emptying of ATMs and recirculation of cash) and cash processing service providers (including custom deposit processing and the provision of cash for ATMs and other recycling equipment).
The rationale for this guidance document is that customers of each type of service need to pay attention to fundamentally different requirements, which it is important for customers to understand when selecting suppliers.
The document identifies common criteria required for both types of services and a series of specific requirement applying specifically to each service. The document can be found on ESTA’s website.

ESTA conference 2015

Next year's conference will be held in Berlin, Germany, in the Maritim Pro-Arte hotel on May 31st to June 2nd 2015. The hotel located on the Friedrichstrasse is very central and close to the Unter den Linden and the Branderburger Tor.

The theme will follow up on last year’s innovation topic and will deal with the capacity of evolution of our industry to foster new value and revisit our business models to generate more value for our clients.

Registration will start in December on ESTA’s website. Pencil in the date!