A new MasterCard study has revealed a rapid shift away from cash in economies including Asian countries.
The study ‘The Cashless Journey’ found out that 55 per cent of the value of consumer spend in China was cashless.
Meanwhile, Singapore (69 per cent) is approaching the “tipping point” to becoming nearly cashless.
In emerging economies such as India (32 per cent) and Indonesia (31 per cent) are just embarking on their cashless journey, but are in many cases changing cash share of payments at a much faster pace than developed nations.
“What seems to be overlooked in the policy dialogue is that cash takes time to access, is riskier to carry, and costs a country up to 1.5 per cent of its GDP. We can’t expect the journey from cash toward electronic payments to be completed overnight, yet driven by technological advances and public-private partnerships this trend has gathered significant momentum over the past few years,” said Peer Stein, director of access to finance advisory services at the International Finance Corporation.
The study indicates that how ready a country is to move to a cashless society is determined by factors like the accessibility and affordability of financial services, the scale and market share of retailers, the level of technology that is available and participation of consumers in the formal economy.
However, in countries such as Japan (62 per cent) and Taiwan (43 per cent), cultural behavior appears to be keeping cash usage higher than market conditions would suggest.
“While each nation’s journey is unique and requires an understanding of local realities, the benefits that come with a more cashless society are universal: more convenience for consumers, better efficiencies for governments, higher productivity for businesses, and greater financial inclusion for society as a whole by bringing more citizens into the economic mainstream,” said Kevin Stanton, president, MasterCard Advisors.