Cashless payments are growing worldwide due to an increased number of financial institution accounts, sustained e-commerce expansion, a migration of cash-based transactions to electronic payment tools and technological advancements, a recent study said.
In 2014, consumers in 60 countries made 417 billion cashless payments, according to the U.K.-based RBR's study "Global Payment Cards Data and Forecasts to 2020." Cashless payments are increasing at a slightly faster rate than ATM cash withdrawals, which suggests a significant proportion of the global population still favors cash as a payment method, RBR said.
Despite citing an annual 7.6% growth in cashless payments volume since 2010, the study revealed evidence of cash remaining resilient on a global level; ATM cash withdrawals rose at nearly the same rate (7.1%) in the same time period.
Cards are responsible for the largest portion of cashless payments and are the fastest growing cashless payment instrument, comprising more than half of cashless transactions worldwide, according to the study. Their share is the highest in North America, the Middle East and Africa, and lowest in the Asia-Pacific region and Latin America.
RBR's figures showed cards accounted for 55% of cashless payments worldwide in 2014, up from 48% in 2010. The number of card payments rose faster than for any other cashless payment instrument, at 12% per year since 2010. The use of cards for low-value payments is also growing due to the rollout of contactless cards and electronic funds transfer at point of sale terminals.
Credit transfers, which are frequently used for high-value payments such as paycheck deposits, increased by 8% per year. Used more in the Asia-Pacific than in any other region, where they comprise 41% of cashless payments, credit transfers are used the most frequently in China, at 67% of cashless payments.
Direct debits, which consumers use for regular payments such as rent, utility bills and taxes, increased by 3% per year. Direct debits' highest share is in Western Europe (23%).
Checks use is declining but is still relatively common in some countries. Now the least common form of cashless payments, checks are becoming rarer in all regions – the number of checks used fell by 10% per year between 2010 and 2014. Even in countries such as the United States, France and India where checks are used regularly, they are still on the decline, according to the report. Checks' highest regional share of cashless payments is in North America (12%).
Credit transfers account for the highest share of total cashless payment value (85%). In contrast, cards account for just 2% of the total value, and direct debits and checks account for 7% and 6%, respectively.
Credit transfers accounted for more than 75% of the total cashless payment value in all regions except North America, where they represent just 38% of the total value. Checks remain the cashless payments method of choice for high-value payments in North America, RBR said.
Checks excluded, cashless payments are becoming more common around the world as consumers begin to respond to campaigns launched by financial institutions, retailers and governments aimed to reduce cash usage, the report said. A rise in consumer trust in electronic payments due to enhanced convenience and security is also a factor in their growth.
Demand for cash remained strong in some regions, however, and even those in which consumers have been quicker to embrace other payment methods have seen a reluctance to abandon cash completely.
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Roy Urrico
Roy W. Urrico specializes in articles about financial technology and services for Credit Union Times, as well as ghostwriting, copywriting, and case studies. Also: writer/editor of a semi-annual newsletter for Association for Financial Technology since 1997 and history projects funded by the U.S Interior Department, National Park Service and Warren County (N.Y.).
