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Cash Use High Despite Increased Adoption of Digital Payments

Categories : Cash is universal
October 24, 2016
Tags : Anonymity, Card payments, Cash cycle efficiency, Cash substitution, Demand, Payment instruments
Based on current usage patterns, cash is expected to remain a significant payment instrument in the near future, even in markets that offer advanced digital payments.
Guillaume Lepecq

The 2016 World Payments Report, published by BNP PARIBAS and Capgemini, concludes that global non-cash transaction volumes grew by 8.9% in 2014, to reach 387.3 billion in 2014. While growth was essentially driven by emerging markets and China in particular which grew by 47%, mature markets1 represent 71% of worldwide transactions.

With regard to cash, the report emphasizes that cash in circulation has increased across multiple markets during the past five years. Growth is driven by anonymity, the fact that it is free to use, cultural habits but also obsolete payment infrastructures. Measured in relation to GDP, cash in circulation has incresed in major markets with the exception of Nordic countries including Sweden. A less know statistic, is that non-cash payments measured by the number of transactions per inhabitant, have also declined in some countries in 2014:  Luxembourg (-1.8%); Ireland (-5.9%); Spain (-0.2%) Malta (-0.6%).

Cash in Circulation as a percentage of GDP in the U.S., U.K. and Eurozone (%), 2010-2014
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Source: Capgemini Financial Services Analysis, 2016; Bank for International Settlements Red Book, 2014 figures released December, 2015

While many countries are taking measures to discourage the use of cash, the Swedish
central bank has informed banks that they are required by law to provide customers with at least one free payment service such as cash.

The report concludes that “Based on current usage patterns, cash is expected to remain a significant payment instrument in the near future, even in markets that offer advanced digital payments.”

1 Mature markets include North America: Canada and the U.S.; Europe: Nineteen Eurozone countries: Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Latvia, Lithuania, Luxembourg, Malta, Portugal, Netherlands, Slovenia, Slovakia, Spain and four non-Eurozone countries: Denmark, Sweden, Switzerland, and the U.K; mature Asia-Pacific: Australia, Japan, Singapore, and South Korea.

 

 

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