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The Global Journey from Cash to Cashless

Hugh Thomas |

Even though much of the world’s population has access to many different options for making payments, cash still persists. Today, around 85 percent of all retail payment transactions are done with cash, which translates into to 60 percent of retail transaction value. As a way of making payment, cash takes time to get at, is riskier to carry; and by some estimates cash costs society as much as 1.5 percent of GDP. Electronic payments on the other hand boost economic growth, while advancing financial inclusion. It is for these reasons that countries around the world are working to make their payment systems less dependent on cash.

MasterCard Advisors developed The Cashless Journey study to track progress towards more cashless economies in 33 countries, both developed and developing economies, from five regions, in total representing more than 85 percent of global GDP.

The study found that many markets have made real progress on their journeys by establishing some basic infrastructure over long periods of time. Affordable and broadly available financial products, a vibrant and competitive merchant market place, a transparent and productive business environment—all of these basics are strongly correlated with success in the cashless journey. Australia has followed this path and is now nearly cashless. Brazil, less far along in its journey, is another country putting the basics in place and reaping the benefits.

To find out more and read the full paper, visit the Cashless Journey homepage.

CashlessJourney_Insights_blog

Topics: Economic Outlook, Payments Strategy

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3 Comments

  1. Amru Kotb said on September 24, 2013 at 10:21 am | Reply

    It is important to understand the local culture that can facilitate applying non Cash Payment and develop the required payment strategy. In some cases it is only illiteracy that stands between cash and non-cash application in others it is about trust.

    • Hugh Thomas said on September 25, 2013 at 10:31 am | Reply

      I couldn’t agree more Amru. We’re actually finding that lack of financial literacy is an impediment to going cashless in many markets. Trust can work both ways as you know. For example, cards help to overcome the lack of familiarity and trust that comes from buying things online from a stranger miles away. We become the preferred instrument in such cases because the buyer can trust that they will get what they were sold, or not have to pay (a guarantee not available when paying with cash).

      • Amru Kotb said on September 26, 2013 at 3:22 am | Reply

        Absolutely Hugh, there should be more energy dedicated towards reducing this financial illiteracy (education) and incentives those who use non cash payments.. One of the ways is to focus on younger population, understands their needs and develop the strategies to meet those needs. MasterCard has some impressive projects in Africa for instance. I believe that those can be doubled by widening the scope and overcoming regulations’ hurdles.