While more people avoid cash for safety and convenience reasons, digital payment solutions like cards and smartphones slowly take the financial world over. Even facial recognition has stepped in to help people pay bills or purchase food. But with all these, cash doesn’t show any weaknesses in front of modern technology.
According to Reuters, multiple central banks have recently announced that cash transactions will still represent a major percentage on the market in the upcoming years.
The Bank for International Settlements (BIS) claims that cryptocurrencies and the disputes around them are part of a wider argument related to the nature of money. While around for around a decade, cryptocurrencies have started gaining popularity in the last few years. Plenty of retailers across the world allow cryptocurrency payments, but they’re way behind better-established options, like cards. Furthermore, they keep fluctuating in value, which makes their market extremely volatile and insecure.
The industry of payments underlines that the use of cash is going down. As a direct consequence, banks and other similar institutions are advised to take it easy on cash machines and physical offices. However, what people don’t know is that cash goes down when matched against cards. But on a global level, the use of cash has actually risen in the last year.
In the last report coming from the BIS, researchers have underlined the fact that cash is still not a relic. BIS economic counselor and research chief Hyun Song Shin says that “constant discussions give the impression that physical banknotes and coins are left behind at a high rate.” He adds that “despite all the modern technological evolution that the payment industry has experienced in the last year, cash still represents the highest growth in most market economies.”
The trend goes in different directions, depending on the country. The volume of cash in current circulation has risen in the United Kingdom – from 7% of the GDP in 2000 to 9% of the GDP in 2016. In other countries – like Sweden, the volume has fallen.
Shin added that “cash resists as a social institution, which reminds us of the importance of understanding the economical function of money, apart from the technological innovation.” The effects over economic giants are insignificant. Whether they use cash or cards, people will still rely on the top names. However, the stable profile of cash can only cheer small businesses like 911 Remediation, which may not have the technology to implement facial recognition or cryptocurrency payments – at least for now.
On another note, card payments – both debit and credit – keep going up almost all over the world. In the United Kingdom only, they have risen from 13% of the GDP in 2000 to 25% of the GDP in 2016. There is a catch though. Most people own more than one card and they use them in multiple small transactions, so the numbers are not too accurate.
Proportionally, cards grow faster than cash. At some point or another, they will probably take over, but it is certainly too early to tell when.