Everywhere in the world, digital payments are on the rise. But that has not phased out the use of cash.
At least not yet.
Recent research by the Bank for International Settlements (BIS) found that trends that accelerated during the COVID-19 pandemic of using digital means of payment instead of cash for transactions have continued around the world.
The average yearly use of cashless payments jumped 10 percent in 2022 in advanced economies and 18 percent in emerging markets and developing economies.
One development that shows a shift in consumer behavior is that people are deploying cashless payments for smaller transactions. In the past, they would have chosen physical money to pay modest bills.
"Initially, the increase of digital payments and decline in cash usage was more pronounced for higher value transactions than for lower value purchases," researchers at BIS said. "However, due to increased user awareness and ongoing innovation, digital means of payment are increasingly being adopted and used for small purchases as well."
While there is evidence that going cashless for smaller payments has reduced cash circulation, BIS analysts suggest that this could also be because smaller denominations are declining, forcing consumers to use cashless tools.
The emergence of fast payments, quick-paced imbursements, for small payments are accelerating the use of cashless payments, according to BIS.
"In nearly all jurisdictions, the volume of fast payments increased while demand for small denomination banknotes declined," the researchers said.
The drop in circulation of smaller-value currency is helping to move consumers to use more cashless options. But cash is still the first option for a significant chunk of the population.
"While consumers increasingly choose to pay digital, cash is still the preferred means of payment for certain segments of the population, such as older people or persons who would like to control their budget," the BIS researchers said.
Travelers also like cash.
"Statistics show that consumers still withdraw cash when being abroad," according to BIS.
Central banks are also working to ensure that access to cash is still easily available.
"For instance, the Bank of Korea plans to work with the government and banks to improve the services and usability of ATMs," BIS said. "In Sweden, certain major banks are obliged by law to provide cash services.
"The UK has put in place new regulation to ensure that people do not have to travel beyond a reasonable distance to withdraw or deposit cash, and in the U.S., retailers are required to accept cash as a means of payment for purchases less than 2,000 U.S. dollars."
Uncommon Knowledge
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Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
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Omar Mohammed is a Newsweek reporter based in the Greater Boston area. His focus is reporting on the Economy and ... Read more
