Although there are increasingly technologically sophisticated ways to pay for goods and services, worldwide, cash payments still win out. Why is this? And what will make electronic payments more attractive?
At a time when smartphones seem to be increasingly omnipresent, credit cards, mobile payments, and digital assets like Bitcoin would seem to be the natural choice for consumers. In the UK in 2015, total money spent on card and electronic payments overtook cash for the first time ever, but private consumers were responsible for 99% of the cash payments, according to The Guardian.
Why Cash Hasn’t Lost its Luster
Payments experts have several reasons for the enduring popularity of cash:
- Familiarity: Bills have been around for more than 300 years, and coins go back to antiquity.
- Cultural expectations: In some countries, even those considered technologically advanced, cash is seen as more reliable and private; furthermore, carrying debt on a credit card can been seen as something shameful.
- Ease of use, especially for small transactions.
Cash remains king even in “tech-happy” countries such as Japan and Germany.
This Fight Isn’t Over
The payments industry is still working hard to win over more consumers. What are the advantages of electronic payments for consumers? Here are some ideas from “Cash isn’t going down without a real fight,” from the Raconteur supplement of The Sunday Times:
- Convenience, such as remote purchasing. This reason is often given in the European and North American markets.
- Fraud protections – these are especially notable in emerging markets, where traditional payments may be subject to criminal schemes. African consumers who have access to smartphones are increasingly opting for “mobile wallet” possibilities.
But the payments industry still faces hurdles. As the market has emerged, different countries and continents have developed their own payments schemes, which may not be compatible with one another. There aren’t clear winners in terms of unified systems – like the iPhone/Android dynamic in the smartphone space – which may be preventing widespread adoption across the globe.
Is there hope for electronic payments eventually winning out over cash? What would a cashless world look like? It will be interesting to watch as different countries and cultures adapt to the new possibilities of a mobile world.