World Payments Report : “cash is still resilient to growing array of digital alternatives”
The digital payments market is fragmented: North America and Europe account for 55% of transaction volumes
Non-cash transactions reached 539 billion transactions globally and experienced a 12% increase compared to the 2018 report. Europe and North America account for 294.4 billion transactions or 55% of the total. China which experienced 74% annual growth only accounts for 64.9 billion transactions, less than 50 transactions per person per year.
Growth in non-cash transactions was driven by the Emerging Asia region which includes China, India, Hong Kong and other Asian countries including Malaysia, Thailand, Indonesia, Philippines, Taiwan, Pakistan, Sri Lanka, and Bangladesh. The region grew by 32.5% compared to 6.9% in the mature economies which include North America, Europe and mature Asia Pacific (Japan, Australia, South Korea, and Singapore).
Globally, cash in circulationThe value (or number of units) of the banknotes and coins in circulation within an economy. Cash in circulation is included in the M1 monetary aggregate and comprises only the banknotes and coins in circulation outside the Monetary Financial Institutions (MFI), as stated in the consolidated balance sheet of the MFIs, which means that the cash issued and held by the MFIs has been subtracted (“cash reserves”). Cash in circulation does not include the balance of the central bank’s own banknot... More has increased by 4 to 7% per year over the last 5 years
The report stresses, that «despite lawmakers’ support of non-cash transactions», cashMoney in physical form such as banknotes and coins. More in circulation has been growing across countries. John Williams President and CEO of the Federal Reserve Bank of San Francisco has shown that cash in circulation grew faster than GDP over the last decade in 40 out of 42 countries representing 75 ù pf global GDP. Sweden and Norway are the two outliers and cash has been growing in Sweden since mid 2018. «Some countries like Mexico and South Korea saw CIC outpace GDP by more than 100 percentage points.»
Cash growing faster than digital payments?
Cash in circulation has experienced particularly strong growth in mature economies, particularly since the Global Financial Crisis, driven by store-of-value demand and low interest rates. More surprisingly the report stresses that 30% of the countries analyzed recorded higher cash in circulation growth when compared to that of non-cash transactions volume.
The five countries which have experienced the highest growth in cash in circulation between 2013 and 2017 are South Korea, Lithuania, Hong Kong, Hungary and Singapore. In all these countries, cash in circulation has outpaced growth of digital transactions over the period. Countries with high non-cash transaction volumes continue to rely heavily on cash. The report states “The unique set of needs that cash can fulfil makes a cashless world challenging to envision, although CIC continues to be affected by digital instruments.”
The report is available here.