Deutsche has published the first part of its report on the future of payments this week and it is no surprise that cash appeared in the headline.
But Deutsche’s report rather than the usual claims that cash is all but history in the developed world, the bank has put a different spin on it. Cash is not about to be wiped out by the rapid growth of digital payments, but plastic cards are.
The report follows a survey of 3,600 customers across the US, UK, China, Germany, France and Italy and predicts what is in store for cash, online, mobile, crypto, and blockchain payments.
In part one of Deutsche’s Future of Payments report: Cash: the Dinosaur Will Survive … For Now
“While we believe cash will stay, the coming decade will see digital payments grow at light speed, leading to the extinction of the plastic card,” said the report.
Even in Sweden, a country often touted as likely to be the first to go cashless, had recognized that cash is likely to remain for a while. Last year the Swedish Civil Contingencies Agency, MSB, has distributed literature to all households with instructions on how to prepare for digital monetary emergencies. It advised Swedes to keep enough cash at home to last a week in case of problems such as online banking crashes.
But plastic cards could have no such stay of execution if digital payment technology continue its rapid ascent.
Deutsche Bank’s report predicted that over the next five years mobile payments to comprise two-fifths of in-store purchases in the US, which is four times the current level. “Similar growth is expected in other developed countries, however, different countries will see different levels of shrinkage in cash and plastic cards.”
The report said that developing countries might skip plastic cards altogether. “Many customers in these countries are transitioning directly from cash to mobile payments without ever owning a plastic card.”
The mobile phone and mobile payments are helping more and more people in emerging economies take part on the economy. Basic mobile phones are allowing people to make and receive payments, which they previously could only do using cash in person.
Not for profit organisations such as the Gates’ Foundation as well as government in Africa and Asia are building mobile payments systems to bank millions of unbanked people.