Voice of the Industry

Cash in todays world – the times they are a-changin

Monday 9 September 2019 14:39 CET | Editor: Melisande Mual | Voice of the industry

An overview of trends and developments with great impact over the use of cash in commerce

Cash – alive and kicking

Most of the times, cash is universal, ubiquitous, and untraceable, therefore it makes people have a sense of security. Not having cash may cause people to feel vulnerable, especially during power breaks or when ATMs are not working – thus, the cashless society dream does not seem, at the moment, very feasible.

Cash also makes people have a sense of independence from government oversight. 50% of the respondents surveyed in 2019 by card-issuing platform Marqeta in Spain, the US, the UK, France, and Germany for its consumer behaviour study admitted they have used cash to make payments with the particular purpose of not leaving a record of what they were buying. That is why cash is also a commonly used payment method when it comes to igaming, providing players with both anonymity and a streamlined way of funding online gaming accounts. For example, PayNearMe does just that, by enabling online account loading with cash.

Furthermore, the transition towards a cashless society is not uniform, as cash usage varies per country and across different age groups. If we take a look at demographic information provided by Marqeta’s survey, we notice that millennials already started using other means for payments. In the US, 49% of millennials said they prefer to use P2P payments instead of cash to pay someone back (20% of baby boomers are likely to do the same), while in the UK 44% of millennials have expressed this preference as well (compared to 21% of baby boomers).

Global overview of cash in commerce

The fluctuation of cash usage in different countries is also worth mentioning. While South Korea and Sweden, for example, have already started this transition to a cashless future, other countries, like Germany, show signs of concern when it comes to digital money. According to the Deutsche Bundesbank, 74% of all domestic transactions in 2017 were conducted via cash, especially for purchases under USD 23. Germans use debit cards provided by banks for around 18% of transactions and credit cards for about 2% of them, proving a low adoption of cashless payment methods.

Generally, across Europe, the use of cash is decreasing at two different speeds, according to G4S’s World Cash Report 2018. Some countries are reducing their use of cash in favour of non-cash (e.g., the Nordics, the Netherlands, the UK), while others still rely on cash, mostly in Southeast Europe. When it comes to the number of transactions in European countries, paper currency is often used in Germany, Austria, and Slovenia, where 80% (or more) of POS transactions were conducted with cash. In the Netherlands, Estonia, and Finland, however, cash was least used, the number of transactions ranging from 45% to 54%.

In the US, for example, the 2018 report on the Diary of Consumer Payment Choice (DCPC) shows that cash accounts for 30% of all transactions and 55% of transactions under USD 10, but there is a decline when it comes to cash usage. In this context, it may seem paradoxical that the amount of cash being issued is increasing. If 40 years ago approximately USD 90 billion in cash was in circulation, this number has increased roughly 20 times, to USD 1,7 trillion nowadays. In his book, Kenneth S. Rogoff – professor of Public Policy at Harvard University and former chief economist of the International Monetary Fund – argues that this is not a specificity of the US space, but rather a globally occurring phenomenon that lies at the core of some of the world’s most intricate problems.

When it comes to Asia, there is a strong discrepancy in cash usage between China and Japan. Cash in circulation in Japan is estimated to be the equivalent of over 20% of the country’s GDP, which is higher than China’s, with 9.5%. In Japan, kiosk payments are still very popular. By choosing this cash-based payment method, shoppers print a voucher or receive a reference number – and with it, they can pay for products at a kiosk, cash register at a convenience store, or bank branch. Cash on delivery is another popular payment method in Japan, allowing customers to pay from home when they receive purchased products. Konbini (convenience store) payments are also attractive, allowing Japanese customers to pay for online purchases in 24/7 convenience stores.

In LATAM, in countries like Peru and Colombia, cash-based payment methods amounted to more than 20% of ecommerce volume in 2016, with Mexico and Argentina close behind, with 19% and 18% cash transactions respectively – according to Worldline. In Brazil, the most popular cash-based payment method is Boleto Bancário, which is regulated by the Brazilian Federation of Banks, issued by banks at the request of merchants, and payable at over one million locations nationwide.

In Africa, there is a tendency to move away from cash-based payments, but things move at different speeds across the continent. Here, many local initiatives are underway. With a smartphone penetration of 60% and 56% of its population being banked, Kenya shows great improvement from 2016 to 2019. According to PPRO’s Payments and E-commerce Report for the Middle East and Africa, this growth has been driven by enhanced performance in mobile telephony and ecommerce, and Kenya’s digital economy is projected to boom. As presented by Boston Consulting Group, in 2018, Rwanda’s central bank announced the launch of a regulatory sandbox for testing digital payment solutions, aiming to go cashless by 2024.


Malawi has also experienced a rise in cashless transactions, while Ghana is digitalising with the aim of streamlining access to financial services. Nonetheless, according to the African Cash Report published by calleo in 2018, the African continent is still quite dependent on cash. Here, the introduction of digital and mobile payments cannot replace cash, especially in countries like Nigeria and Morocco, where there is low banking penetration.

Looking into the future

Cash cannot be hacked, it doesn’t rely upon POS technology, it is accessible, user-friendly, reliable, and trusted – hence its popularity. Nonetheless, undeclared payments in cash lead to tax gaps, and there are great costs associated with it. According to Boston Consulting Group, one of the main banks in the North American landscape spends approximately USD 5 billion every year just to process cash and check transactions and servicing ATMs – and the UK spends about GBP 1 billion a year for free-to-the-customer ATM withdrawals.

The payments landscape is, as one might expect, very diverse – however, worldwide, cash remains the leading payment method at the checkout for now, even if spend tends to shift from cash to cards and e-wallets, and the use of cash registers a decrease in every global region. Worldpay projects that, by the end of 2019, cash will be replaced by debit cards as the leading POS payment method, and by 2022, it will be surpassed by credit cards, debit cards, and e-wallets. What’s more, according to Marqeta’s survey conducted in 2019, 50% of the respondents believe that cash will disappear completely in the future.

In order to succeed in ecommerce across different regions, cash is still needed because it is relevant, and there is a high reliance on this payment method, both via kiosks and cash on delivery. Looking towards the future, we expect technological developments regarding payments to further impact cash usage worldwide.

This editorial was first published in our Payment Methods Report 2019 – Innovations in the Way We Pay, which provides a comprehensive overview of the up-to-the-minute trends, updates, and innovations in the payments space worldwide, depicting the key developments in the way people pay.

About Raluca Constantinescu

src=/images/raluca-constantinescu.jpgAs Content Editor at The Paypers, Raluca is specialising in online payments, digital wallets, PSPs, mobile payments, omnichannel commerce, online retail, and cross-border transactions. She holds a Bachelor’s Degree in Foreign Languages and Literatures and has a wide background in editing and publishing.


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Keywords: cash, Raluca Constantinescu, payment methods, commerce, in-store
Countries: World

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