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If you are living in South Korea or Australia, you may not have to bother carrying a wallet in the future, because paper money will cease to exist by 2030.
The truth is, residents of both countries are already using cashless payment methods. The Bank of Korea, for example, is already planning to replace coins and banknotes with e-wallets, backed by payment methods such as prepaid cards.
South Korea’s move to go cashless is spearheaded by the government, but consumers in the country have also been supportive. In 2016, South Korea accounted for 41.7% of the Asia-Pacific region’s total mobile payment market. It was second only to Japan, which contributed 47.5%, almost half the market.
While the government leads the charge in South Korea, tech-savvy consumers in Australia who are eager to go cashless have been driving the declining use of cash in that country.
Although Australia accounted for only 2.9% of total mobile payment revenues last year, no less than 87% of Aussies are gearing up to embrace alternatives to cash, driven by the wide availability of mobile payments.
That said, paper money still has its old-world charms. Because it cannot be traced, protecting the identity of users, it will still be preferred by privacy-seeking individuals. Also, having some cash on hand is useful during system downtimes.
Paper money is also a big part of Asian culture. During festivals and celebrations, people in countries such as Malaysia still exchange cash gifts with each another. So paper money might not give way to mobile payments just yet.
In China, however, online payment platforms such as Alipay and WeChat have changed the game, pushing users to send money online via e-hongbao. It is likely that the two fintech giants will also expand their footprint in India, where investors are encouraged by their successes in China.
But mobile payments have a huge target to meet. Because mobile payment penetration is marginal, it will require at least five more years to become the favoured method for financial transactions in the Asia-Pacific region.
Today, the convenience of mobile payments is negated only by the fact that many companies have yet to undergo digital transformation. Also, there is no guarantee that consumers will replace their physical wallets with multiple payment apps. That is why developing countries will take a little longer than developed countries to go cashless.