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Rapid spread of cashless technologies does not mean the end of cash

Categories : Cash is universal
August 9, 2016
Tags : Cash substitution, Efficiency, Mobile phone, Unbanked
The majority of transactions worldwide are made in cash, representing more than 90% of payments in emerging countries.
Communication Team / Equipo de Comunicación

Over the last few years, cashless technologies such as Apple Pay, Amazon or eBay e-commerce have been gaining ground. These electronic means of payment are increasingly spreading across the world, most probably thanks to their accessibility from the comfort of one’s sofa. In addition, “mobile money” enables people to deposit, spend or transfer cash through their smartphone, using the same principle as a bank account but via a mobile phone operator. This service, mainly provided by M-Pesa (Kenya), is particularly successful in developing countries where more people have access to mobile phones than to traditional bank accounts.

Nevertheless, the majority of transactions worldwide are done with cash. Indeed, many poor regions do not have the required infrastructure to support cashless payment methods, and usually a large number of the population works outside the formal economy.

It is true that there is a relation between a country’s economic development level and its use of cash, but cultural factors also play a significant role. For instance, countries like Germany and Japan are in no hurry to move from banknotes to modern technologies. An explanation could be the seemingly low crime rates in these countries, where carrying cash does not represent a risk.

Data from 2015 shows that 66% of Western European transactions were made in cash, 65% in Asia-Pacific (developed part) and 48% in North America. But the picture is completely different in emerging regions, where cash represented 91% of transactions in Latin America, 93% in Eastern Europe, 98% in Asia-Pacific and 99% in Africa.(Source: McKinsey/Capgemini)

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