DESPITE the increase in online payment transactions due to the pandemic, experts from the Asian Development Bank (ADB) said the world can’t discount cash yet.
In an Asian Development Blog, ADB North America Office Representative Bart Édes and Former Senior Editor Alastair Dingwall said cash is deeply embedded in day-to-day life in many countries, making it an important tool in local economies.
Édes and Dingwall also said many electronic platforms are not covered by banking regulations or insured by institutions such as the Federal Deposit Insurance Corp. in the US.
“Cash is deeply embedded in the daily life of some countries,” the authors said. “For farmers in Indonesia, vendors in Cambodia or pedicab drivers in Bangladesh, the concept of using an app over cash is still far-fetched. But it is a lot more plausible now than it was before the pandemic.”
While cashless transactions have become the norm in cities, Édes and Dingwall said it is worth noting that a large chunk of the population in each country still relies on cash transactions.
They said that in China, where many have embraced digital payments, around 30 percent of the population still do not own a smartphone. Even in the US, there are 8.4 million households who do not own bank accounts.
“If cash is on its way out, its departure will be staggered,” the authors said. “A lingering death [of cash] seems more likely.”
Édes and Dingwall said nearly half or 46 percent of those surveyed by Mastercard in Asia and the Pacific said they used cash less often as of April this year.
They said that the use of cash in countries like the United Kingdom has declined to 23 percent as of 2019 from 87 percent in 1985.
In 2018, they said, 98 percent of people who owned smartphones in cities already used their units to make mobile payments.
This has led to the success of companies like Venmo which operates like a digital wallet, as well as a social-media feed and allow easier peer-to-peer transfers.
The app now has over 50 million user accounts, with a net payment volume of $31 billion in the first quarter of 2020 alone.
“The move away from cash has been bolstered by two other powerful trends: the rise of online shopping and a striking willingness to trust gadgets,” Édes and Dingwall said.
“If a shopper in Shanghai is likely to reach for WeChat, a Manila diner might buy her meal using GCash, and a New Yorker might buy his coffee by waving his Apple watch at a card reader,” they also said.