Will Cash Disappear?

Will Cash Disappear?

By NATHANIEL POPPER NOV. 14, 2017

Cash is unlikely to go away soon. Coins and paper currency remain the most popular ways to pay for things in most countries. But longer term, cash appears to be in a losing battle with electronic payment methods.

There are few corners of the world where electronic transactions are not growing faster than cash. The consulting firm Capgemini recently estimated that electronic payments will grow about 10.9 percent a year between 2015 and 2020.

But the movement away from cash is happening in very different ways and at varying paces around the world.

Scandinavian countries are already well along the road toward cashless societies. Many banks in Sweden no longer have cash on hand, and consumers can make instant transfers directly from their bank accounts.

In Kenya, the local mobile phone company Safaricom, not the banks or the government, has pushed the envelope. Safaricom created a system, known as M-Pesa, that allows customers to make payments directly from their phones.

China is the most talked-about location in the battle between cash and electronic payments. PayPal-like wallets created by Chinese online giants Alibaba and Tencent have become the most popular ways to pay for things online.

The benefits of moving away from cash have been trumpeted by economists like Kenneth Rogoff, who wrote “The Curse of Cash,” about how paper money enables crime and tax evasion.

But the critics of cash have been met by their own critics, who argue that electronic payments can disenfranchise poor people who lack easy access to bank accounts and the internet and can make it much easier for governments and corporations to monitor a person’s every step.

In the end, though, the future of money is less likely to be determined by these arguments than to be shaped by the success of technologists making it easier for you to pay for your lunch or morning coffee without pulling out your wallet.

As part of its war on corruption, South Korea has pushed hard to move its financial system away from cash. Companies refusing to take electronic payments have been penalized, and the South Korea central bank has called for a “cashless society” by 2020.

Kenya is a model for how electronic payments can evolve without banks. M-Pesa, introduced in 2007 by the largest Kenyan mobile phone provider, Safaricom, allows people without bank accounts to send money electronically. Most Kenyans are using the service.


In the last few years China has led the charge into the cashless future. Internet giants like Alibaba and Tencent have created their own online payment methods. Alipay and Tenpay have rapidly become the most popular ways to pay.

India has been slow to move away from cash. But last year it took the largest cash bills out of circulation as part of an anti-corruption campaign. Companies like Facebook and Alipay hope the move will provide an opening for electronic payment systems.


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