Cash is no longer king. 2020 was a banner year for cashless payments, as cash fell below a quarter of global consumer payments. Driven down by a global pandemic, cash is being further eclipsed by new cadre of fintechs, card companies and real-time payments, but despite the global decline, it still holds significant cachet in certain regions, and is politically sensitive, leading to legislative action. This briefing offers a snapshot of global cash use and trends in a time of payments upheaval.
Government policy is increasingly directed at cash usage. For many markets this means establishing means to shift transactions out of cash to help combat tax evasion, fraud and money laundering. Additionally, the financial sector is entering a new era where central bank digital currencies (CBDCs) and cryptocurrencies are increasing in relevance.
COVID-19 has accelerated the shift to cashless payments globally. Early concerns about hygiene and possible virus transmission via currency led many to eschew cash usage, with some governments establishing cash quarantines. Countries with strong payments infrastructure and existing platforms saw more seamless transitions to cashless payment, while some countries with high cash dependence or large unbanked populations struggled to adapt to changing conditions amidst the pandemic.
The disruptive nature of technology has come more slowly to payments than many other sectors of the economy. Nevertheless, fintechs and banks are looking to adapt their models rapidly to a changing environment. This frequently means targeting new unbanked customers as an opportunity for further growth beyond more saturated existing customer bases.
In many countries, financial inclusion efforts are taking aim at cash use by looking to embed consumers more directly into the cashless economy. At the opposite end, concerns about the exclusion of portions of society through cashless initiatives and policies have increasingly led to backlashes and campaigns.
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