Booming cash deposits in ATMs – The reasons

By Leonidas Stergiou

Although most ATM transactions are withdrawals, the highest value per transaction is in cash deposits at the machines. In fact, the average cash deposit at ATMs is more than double the average withdrawal, while from 2017 until today. The total value of cash deposits through ATMs has increased fivefold, while the corresponding value of withdrawals remains relatively stable. At the same time, bank deposits are increasing, while cash in circulation is decreasing.

New consumption habits, familiarity with ATMs from capital controls and with electronic transactions during the pandemic, inflated accounts due to revaluations and the dominance of cash in the Greek economy are some of the causes that explain the phenomenon. To these is added the number and geographical distribution of ATMs and the transactions they support as the number of bank branches is limited, combined with the rise of electronic transactions. The burden on households can be seen from the decrease in the average withdrawal this year and from most purchases through debits of a smaller value.

According to data from the Hellenic Banking Association (HBA), in the first half of the year, total sums of 9.3 billion euros were deposited through ATMs, when 15.8 billion euros had been deposited throughout 2021. During the pandemic year 2020, when the increase in bank deposits was also observed, 33 billion euros were deposited through ATMs, compared to, indicatively, 3.6 billion euros in 2017. At the same time, a surge in the number (number) of transactions for ATM deposits was observed . For example, from 9.6 million deposits (transactions) in 2017, the number in the first half of 2022 alone was double (18.8 million transactions), compared to 33.1 million transactions in 2021 and 26.6 million .transactions in 2020.

So, the average deposit in the first half of the year amounted to 491 euroscompared to 477 euros in 2021, 451 euros in 2020 and 375 in 2017. The total value of cash deposits in ATMs from 2017 to date shows a more than doubling, according to ECB data for Greece.

However, in addition to cash deposits at ATMs, in the first half of the year 3.2 million other monetary transactions (e.g. bill payments), deposit into a third party account (e.g. rent) totaling 780 million euros (248 euros per transaction).

Cash withdrawals

On the other hand, cash withdrawals from ATMs in the first half of the year were 98.8 million with total value of 22.2 billion euros. So the average cash withdrawal is calculated at 225 eurosi.e. slightly lower than the average withdrawal of 2021 (230 euros) and higher than 2020 (206 euros) and 2017 (170 euros).

Comparing the average withdrawal amount with the average deposit amount shows that today the average deposit is more than twice the average withdrawal amount. However, in terms of popularity, the ATM remains dominant in withdrawals when considering the total number and total value of withdrawals (relative to deposits). But both the number of deposits and the total amounts have almost quintupled over the past four years.

10 main trends and causes

According to bank executives, the main reasons that have highlighted the ATM as a new means of paying and depositing cash are the following:

First, there was a lot of familiarity with ATMs from capital controls in 2015, which were fully lifted in August 2019. Capital controls mainly affected withdrawals (that’s why they were imposed), while on the deposit side confidence had already been shaken.

Second, return of cash from the market and “chests” to the banks. This became marginally evident after 2017, with more pronounced signs from 2019. This was contributed by the restoration of confidence in the banking system, the pandemic, but also the increase in the obligations of households and businesses to pay bills. Thus, the reduction of cash in circulation gradually began with a parallel increase in the balances in the bank deposit accounts. Indicatively, according to data from the Bank of Greece, in 2020, when the support measures for the pandemic began and the increase in deposits from the lockdowns, the currency in circulation was estimated at 22.6 billion euros. In 2021, with the continuation of the support measures but also the increase in bank deposits, the currency in circulation decreased to 20.2 billion euros. In the first half of 2022 it saw a further drop to 18.8 billion euros.

Thirdly, the increased bills mainly of energy. This can also be seen from electronic transactions. According to DIAS Interbank Systems data, with the development of IRIS electronic transactions, cash payments in stores fell by 54% in the five months of 2022 compared to 2020. Electronic payments (standing orders) for energy increased by 25%, but their value by 63%. These figures show both the reduction of cash from the market and the increase of electronic networks as well as the increased bills due to the revaluations. The household burden may explain the slight decrease in the average withdrawal value in 2022 (225 euros from 230 euros in 2021), in combination with more purchases via low-value debit cards.

Fourth, the increase in deposits and in general ATM deposits is mainly due to businesses. There are businesses that collect cash in their coffers (by nature of their activity) and deposit it in bank ATMs. The restart of the economy after the pandemic and in general the increase in turnover (and due to revaluations) caused a huge increase in deposits from businesses at ATMs, to the point that one systemic bank imposed a cap. In this way, he wanted to decongest the stores’ ATMs, directing these deposits to the cash register for better cash management (cost and security) and for reasons of regulatory compliance (origin, etc.). This trend, in the entire market, is expected to be limited due to DIAS’s special IRIS applications for businesses and individuals.

Fifth, the number of ATMs may have decreased but not as much as stores. The key point is that they accept deposits based on ATMs operating inside the store and trading centers created by the banks. For example, in 2012, according to EET, there were 6,650 ATMs across the territory (4,090 in-store and 2,565 out-of-store). In 2017, which was taken as a comparison for withdrawals and deposits, there were 5,505 ATMs (2,740 in stores and 2,765 outside stores). In the first half of the year, the total number is higher than it was five years ago. There are 5,788 ATMs across the country, but fewer in stores and more outside. Specifically, there are 2,323 ATMs inside stores and 3,359 outside stores.

Sixth, the geographical distribution of ATMs and the transactions they support also plays a role. That is, it is important if there are ATMs that accept deposits in areas where there are businesses that deposit cash (eg tolls). However, as electronic transactions increase, so will this need be reduced. The geographical distribution generally plays a role in the accessibility of bank customers and consumers to ATMs (e.g. ratio of the center of Athens and the periphery, islands, etc.).

Seventh, 97% of cash transactions may be carried out through banks’ digital networks, but this includes ATMs. According to ECB data, the value of ATM transactions corresponds to almost 6% of the total (around €1 trillion expected in 2022 from around €940 billion in 2021).

Eighth, there is the impression that depositing cash through an ATM to a third party account is not detected by the system (banking and tax). In fact, recording and tracing is a bit more difficult especially in cases where someone withdraws cash from the ATM, gives some of the cash to someone else and they deposit the cash into their account. However, the details of cards and accounts used to withdraw and deposit cash at ATMs as well as bank account movements and balances are recorded. When certain limits are exceeded, the system is activated, as is the case with internal or external remittances or deposits/movements from the counter. It is easier to register to deposit cash to a third party account directly through an ATM.

Ninth, cash, despite the increase in electronic transactions, still remains the dominant means of payment in Greece, according to data from the ECB (SPACE study) and the Bank of Greece. The ECB report shows that cash represents 80% of total transactions in the economy (hand-to-hand and interbank/electronic) and 62% of value. The Bank of Greece compares the value of ATM cash withdrawals with the total of ATM and card (debit and credit) payments. This percentage is still above 50%, but decreasing. Thus, the ratio of cash to card transactions and ATM withdrawals stood at 63% in 2019 and fell to 52% in 2020 (from 85% in 2015). In 2021 it is estimated at around 51%.

Tenth, the course of tourism also plays a role. In general, the increase in arrivals and revenues boosts traffic at ATMs (mainly withdrawals from tourists) but also deposits from hotels, tourist agencies, etc. In 2019 there was a record collection and it seems that a new one will be recorded this year, approaching or exceeding 20 billion ., according to estimates by banks and entrepreneurs in the tourism sector.