Jun 24, 2024

Guven Aytas. The future of cash. What to expect

Home » Guven Aytas. The future of cash. What to expect

As the world moves more and more into the digital realm and faces economic and geopolitical challenges, the question of cash’s future is increasingly being asked. Predictions about how this will be resolved vary.

Will cash disappear or will it continue to rival digital currencies? Will digital currencies, which we don’t physically touch but which clearly make our lives easier, dethrone paper money? I would like to make an assessment based on the statistics and scenarios published on this topic, which has been discussed a lot recently


European countries with the lowest use of cash

A study by Merchant Machine has shown that Norway is the country where people use cash the least to pay for services. According to the Norwegian Central Bank, Norwegians use coins and notes for only 3% of financial transactions. Nevertheless, this year the Norwegian government put forward a proposal to ensure that consumers can also pay for services in cash. Norway is followed by Finland, Sweden, Denmark, Switzerland and the UK. Interestingly, the UK saw an increase in cash use in 2022 for the first time in 10 years. This is thought to be due to the worsening economic situation of the population. Then, as the cost of living increased, cash became an effective tool for some people to keep track of their daily expenses and manage their finances.

According to statistics compiled by Merchant Machine, the countries with the highest use of cash in Europe are Bulgaria, Romania, Greece, Ukraine, Portugal and the Czech Republic. 


Three possible scenarios

Between 2022 and 2023, the Bundesbank conducted a study in which researchers, central banks and various organisations were interviewed. The data obtained led to conclusions on three different scenarios for cash payments in 2037.

In the first scenario, the world is expected to be highly digitalised and cash will almost disappear. In the future, it is predicted that there will be few bank branches and ATMs, and it will be not impossible to withdraw cash in the shopping centers, as people will hardly use coins and notes to pay for goods.

In the second case, there will be a partial return to the use of cash. The world is expected to face increasing supply chain disruptions. As a result, businesses will prefer to trade locally rather than globally. There will be a sense of preparedness for disasters and crises, which is one of the reasons why people will look for quick and easy payment solutions – cash. In this scenario, cash use initially declines, but stabilizes by 2030.

In the third case, there will be an environment in which people’s use of cash depends largely on their attitudes. In the retail sector, customers will be encouraged to use cashless payments. As a result, the use of cash will gradually decline.

According to the Bundesbank, the use of cash will decline in all three scenarios over the next 15-20 years.


The digital euro – an additional path towards cashlessness

The European Central Bank (ECB) is considering creating a digital euro. It  would be a digital version of euro notes and coins. This would be an additional means of payment both in the digital space and offline in the entire eurozone, for the use of which a person would not have to pay. According to the ECB, users could use such currency through their payment service provider’s proprietary app and electronic interface or through the digital euro app provided by the Eurosystem. Experts believe that the digital euro could be one of the alternatives to digital currencies like bitcoin.

So will cash disappear? Probably not. There are several reasons for this. First, according to the ECB, cash is the most popular means of payment in the eurozone, with the vast majority of everyday payments being made in notes and coins. Cash is also particularly important for the inclusion of vulnerable groups, such as the elderly or those on low incomes. Second, according to a Deutsche Bank survey conducted in the UK, US, China, Germany, France and Italy, 21% of Americans and 28% of Europeans consider cash to be their preferred payment method. Third, according to the World Bank, 1.4 billion people have no bank account. Fourth, statistics show that in times of economic uncertainty, cash is used more often than in the past. However, in the last 5 years, the world has made great strides in developing innovative digital payment methods. For example, figures from Statista show that by 2020 there was around 2.8 billion mobile wallets in use around the world. By 2025, the number of such wallets is expected to reach 4.9 billion worldwide. Convenience is and will continue to be the main reason for the dominance of digital payment methods, and in the long term, payments in notes and coins will be extremely rare, but they will remain.


Guven Aytas, Head of Global Sales at EMBank

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