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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