Like it or not, cash is being used less and less as a form of payment. On the other hand, governments and monetary authorities seem to show a certain preference towards digital payments due to the possibility of tracking them and prosecuting tax fraud or illicit activities. It will not be today or tomorrow, but everything indicates that cash faces a future at least complex.
“I think ten years from now the normal thing will be to pay digitally, and people will look at you strangely if you try to pay in cash,” says Jody Jonsson, Equity Manager of Capital Group.
Last week, the latest American Express survey was released , pointing out that the trend seems unstoppable. The previous barometer had that during the past Christmas 72% of Christmas spending was paid by card (credit or debit), 8 percentage points more than last year, compared to 20% of expenses that were paid in cash, this falling method in 7 points compared to last year.
Now the trend is even more apparent. In the first months of this year, digital payments have continued to gain ground despite the decline of covid-19. Now, card and contactless payments already represent 80.4% of those made in physical establishments and only one in three consumers has continued to use cash for their purchases.
Jody Jonsson believes that this is a global phenomenon and that it touches all economies: “This trend has been especially evident for some years in emerging markets, where many consumers did not have a checking account but did have a mobile phone and adopted the technology of fast mobile payments “.
However, it must be recognized that the pandemic has accelerated the use of digital payments around the world, even in those countries where they were not incorporated into daily life. “I think that, when the crisis ends, many more people will be used to making digital payments and it is likely that they will not feel the need to use cash as often,” says the Capital Group expert.
Young people set trends
The American Express study also reveals that the adoption of this means of payment is led by millennials, who barely make 13.7% of their spending in shops in cash, while they are residents of large urban centers , such as Madrid and Barcelona, those that make the greatest use of contactless payments.
On the other hand, the emergence of new payment methods that are simpler and more comprehensible for the entire population, together with the possible arrival of public digital currencies ( CBDC for its acronym in English ), could further reduce the use of cash as a means of payment. payment, which would not prevent, in principle, that people or companies could continue to store bills and coins as a form of savings, as long as they are still considered legal tender by the central bank.
For their part, debit cards are the “undisputed leaders”, being used by 68.5% of consumers, followed by cash and credit cards, with 36% and 31%, respectively.
“Consumers will become increasingly accustomed to technology, which could favor large companies with a global presence. We have also seen strong growth in smaller companies located in countries like Brazil that offer mobile payment platforms for merchants,” Jody Jonsson ruling.