The World Payments Report 2019 found that emerging markets will experience a growth rate in cashless-payment transactions of around 23.5% in the coming years. Do you think that cashless payment could take over from cash in the near future – and, if so, can cashless alternatives provide the same level of public inclusion?
Because the consumers’ payment preferences are highly diverse, cashless-payment providers target specific customer segments. So no, they can’t reach the same market share or level of inclusion as cash. Some users may opt for cashless alternatives because of perceived added convenience, such as credit functions, loyalty points, or promotional discounts. But such extra functionalities usually either incur fees or involve the collection of data.
Today, cash serves as the benchmark regarding costs for all non-cash systems and keeps their fees low. Cash could certainly become less prevalent if access becomes difficult, if acceptance becomes uncertain, or if digital business models that reject cash prevail. But such models often force the user to subscribe to a third-party contract with a profit-driven provider. If global, private, digital schemes were to take the lead in digital payments, central banks’ ability to preserve economic and financial stability would be undermined.