Recently there has been a lot of talk about cash being phased out in favour of electronic payments. John Cryan, CEO of Deutsche Bank has predicted that cash will be abolished within a decade. However, when looking at the spending habits of Germany, Europe’s largest economy, this doesn’t appear to be the case.
Germans conduct 80% of their financial transactions using cash and only 33% own a credit card. However, Germany’s reluctance to let go of cash could be attributable to their different values and customs. Germany is a nation that prides itself on frugality, paying its bills on time and avoiding debt, which explains why the German word for debt, schuld, also means guilt.
In contrast with Germany, other major European countries have embraced electronic payments and are moving away from cash. In the UK electronic payments are flourishing, in part due to new innovations, such as contactless payments, and the convenience they bring.
Commuters in London are now able to use their contactless payment cards to pay for their travel, allowing them to save money and avoid the need to purchase tickets daily. Nearly a million Londoners choose to do this every day. Therefore it won’t come as a surprise that contactless transactions in the UK have increased by 250% year on year. Sweden, Finland and Denmark are also on their way to becoming cashless societies. The Danish government has already allowed shops to stop accepting cash.
So why are we seeing this push towards having a cashless society?
Cash costs money to process, to provide security for and to be replaced as notes gets worn out. In addition, many people hoard cash which removes it from circulation. This means that governments and central banks don’t have full control of monetary policy and prevents them from influencing it to benefit the wider economy.
A move away from cash towards electronic payments will also benefit the global marketplace by making cross-border transactions easier, faster and cheaper.
Payment gateways such as ONPEX allow consumers and merchants from all around the world to widen their possibilities, regardless of the limitations of their local currency.