Monday, 15 October 2012

Death of Physical Cash

Recently a friend of mine was in Japan and noted the relative infrequency of credit card acceptance at various merchants.  Its a bit shocking sometimes to think many places still don't accept credit cards (mostly developing regions) as living in the US, its pretty easy to forget physical money is still essential.  I know I almost never carry cash around anymore.

So how much is global non-cash based payment doing?  Here's a chart from The Economist:

Note the consistent rise in non-cash payment, 20% growth from 2011 vs 2008 and double vs 2001.  North America looks pretty flat for the last 4 years and the majority of growth is coming from Asia/BRIC.  About 80% is from developed countries.  And apparently Brazil is now the second largest market after US.

As for specific uses:

Cards account for 56% of non-cash payments; more than one in three payments are made with a debit card (increasingly chosen over cash for small amounts).

How long would it take before most of the world is using non-cash?  And would it take the form of traditional credit + debit cards or would it look more like paypal, google wallet, NFC payments?  Regardless, this trend is favorable for Visa, Mastercard, and Amex as well as other companies in the industry.  While the rate is formidable, 7% growth per year means it'll be a long long while till cash is gone.

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