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A new report from Deutsche Bank says that despite the accelerated growth towards mobile payment adoption, cash will continue to be an important part of the economy in many nations around the world.
The report shows that mobile payments will quadruple to 40% of in-store purchases in the U.S. in five years, with similar growth in other developed countries. In certain markets this will lead to shrinking use of plastic credit and debit cards, however, cash will remain an important part of many economies.
"When people discuss the future of payments, they tend to predict the end of cash," Marion Laboure, vice president at Deutsche Bank Research, told Mobile Payments Today via email. "Our view is different. Not only do we think cash will be around for a long time, we see the transition to digital payments as having the potential to do no less than re-balance the global economic power."
He noted that in emerging economies, plastic cards are being skipped entirely as underbanked communities jump from cash directly to mobile payments. In India, for example, cash payments fell from 59% in 2000 to 30% in 2016. In China, cash payments fell from 63% of payments to 11% by 2016.
By contrast, in developed economies, cash and plastic cards are well ingrained in the daily lives of consumers. About 40% of consumers in developed nations prefer traditional payments over digital wallets.
Laboure said the rise in mobile payments is due to a number of factors, including speed, convenience and the absence of fees. He said retailers are taking note of the trend by installing mobile payment apps to fit customer desires. He said mobile payments remove a psychological barrier because there is no need to type in a PIN code or handle cash.
Cover image: iStock.
Companies: Deutsche Bank AG
David Jones is a veteran business and technology journalist, with three decades of experience writing about business travel, real estate and technology.
Since 2015 he covered a range of technology stories for the ECT News Network, which includes the E-Commerce Times, TechNewsWorld, LinuxInsider and CRM Buyer, writing about cybersecurity, artificial intelligence, machine learning, open source computing and privacy issues among others,. He recently covered FinTech issues for PYMNTS.com.
He worked as a staff writer for Bloomberg Business News and an online reporter for Crain’s New York Business. He has written for numerous media organizations, including Reuters, The New York Times, The Real Deal, Continental, City Limits and The Nation.
He was previously awarded the George Washington Williams Fellowship for Journalists of Color by the Independent Press Association.