Envision a future where all the transactions are paperless. For some, it feels like utopia with less theft and more convenience, while others suggest more dystopian scenarios where all your money and assets can be taken away by an evil omnipresent government at any moment. While I, personally, believe truth lies somewhere in between, many regions of the world are already nearing the idea of cashless society. Let’s study their examples to see how far on the scale of fully eliminating cash we have got today.
Cash Decline – A Global Trend
One might see with the naked eye that cash is used less and less every year. McKinsey estimates that global cash usage has dropped to 80% of its 2019 levels and is decreasing by 4% each year.
This number is approximate, of course, as some years may be more devastating for the good old paper banknotes. For instance, in 2023, the share of global cash use fell by 8%. The pandemic of 2020 has also significantly accelerated the cash decline due to healthcare precautions.
And yet, the average year to come will expectedly bring us 4% less cash use and 4% more digital transactions. At that ratio, in 2045, which is not so far ahead, young kids will ask their parents what coins are. But is it that simple?
Despite the overall and steady decline, cash remains a top payment choice for in-store purchases in dozens of countries and destinations, from Thailand to Greece. What makes it so appealing?
Who Holds On to Cash Payments and Why
Although the general financial direction of global societies seems to be cashless, there are several occasions and use cases when cash still makes more sense.
- low-value transactions may trigger unproportionally large fees for merchants or customers, depending on the digital payment method, or require additional checkout steps, so many people prefer to go with cash for small transactions;
- people struggling with debt or finding themselves in critical financial conditions, believe cash is one of the best ways to budget smartly and get greater control over your finances, if only just temporarily;
- many countries have a large share of the informal or shadow economy, which uses cash for purchases and payments, to hide business activities from the government bodies and avoid taxes or painstaking registration;
- poor payment infrastructure in the region or country prevents local citizens from using digital payment methods as they please;
- various vulnerable and marginalised individuals simply don’t have access to digital payments because they lack official status, bank account, smart gadgets, internet connection, etc.;
- some people do not trust digital payment systems as they often become targets of data breaches and exploitation, as well as banks that might go bankrupt and freeze user assets or experience other crises;
- cash transactions also particularly appeal to people concerned about their data privacy or who prefer to keep their purchases private (whether for personal, cultural, or security reasons) – they’re usually the ones who see cashless societies as gloomy dystopian pictures;
- people who have lived in troubled regions and faced military conflicts, revolutions, or other significant economic and political turbulence events, know how the digital infrastructure of businesses and institutions may get disrupted or ruined, and tend to stash some cash just in case.
Why Economies Want to Go Cashless
Nevertheless, many nations across the world have strategic goals to become 100% or almost fully cashless in the nearest future. They have pretty solid reasons for that.
To begin with, digital transactions are more convenient. You don’t need to carry around lots of banknotes and coins, fumble with all that at the checkout counter, and cause troubles to the cashier looking for change.
Online payments prevent many crime types. I could tell you a personal life example, where my colleagues were robbed and beaten since they stored and managed plenty of cash in their office, but I’m sure you know plenty of such examples yourself, if you’ve been on this Earth long enough to witness the prevalence of cash in daily use. Even modern financial crimes such as crypto ATM scams leverage cash in their sophisticated schemes.
Cashless transactions make the economy more financially stable and secure. One can see exactly who pays what to whom, there’s either no or fewer places for counterfeit money, tax evasion and money laundering, and it gets easier to detect fraud and track suspicious financial activities.
Nearly Cashless Economies 2025
While some countries struggle to establish adequate infrastructure for digital payment growth, others move towards becoming cashless at giant leaps.
UAE
The United Arab Emirates and, especially, one of its wealthiest emirates, Dubai, are steadily proceeding with their strategy, which is supposed to eliminate cash transactions in the country in early 2030s. Already today, 97% of government transactions in Dubai take place online, using various types of contactless payments as well as crypto. More than three quarters (77%) of retail transactions in the UAE are also cashless, with tips and money exchanges between friends and family remaining the main purposes of cash use. The government’s idea is to make 90% of all transactions in Dubai across both government and private sectors digital by 2026. The nationwide strategy aligns with this vision, however, the milestones for the whole country are a little more stretched out in time.
Canada
In Canada, digital payments represent 86% of total payment volume and 75% of their total value. More than half of all payments are not only digital, but also contactless. The country still has a solid share of cash payments and other legacy paper payment methods. However, in 2023, online transfers surpassed cheques by volume for business payments for the first time, which gives hope for the future of the digital economy here. Credit and debit cards are the top two payment methods of choice for Canadians, together contributing 63% of total payment volume. The volume of online transfers, including methods like Interac e-Transfer and PayPal, increased by 14%, while their transaction value grew by 20% in the latest reported period, making them the fastest-growing form of payment nationwide.
Hong Kong
Digital payments in Hong Kong are experiencing impressive growth, largely, due to government initiatives to promote cashless transactions. For instance, after the pandemic, the local government did not simply distribute cash to support the economy like many countries did. Instead, it issued $36 billion in ‘consumption vouchers’ which encouraged Hong Kong citizens to use digital payment channels such as AliPay, Octopus, PayMe, WeChat and Tap & Go. The volume of cashless payments here surged from 5,7 billion in 2017 to 7,8 billion in 2023. It is expected that digital wallets will become the leading payment method in Hong Kong by 2030, representing 45% of online transaction value and 48% of in-store PoS transactions. However, so far, they’re on equal footing with cash transactions that are still highly popular in Hong Kong, after the payment cards which are preferred by 90% of the locals.
Singapore
Five years ago, Singapore had plans to become cashless by 2025. Although it didn’t work out as well as the government hoped, the country is working relentlessly towards developing a digital payment infrastructure needed for the transition. In 2023, electronic payments accounted for 58.1% of payment transactions volume in Singapore. The country famously boasts near universal (99,9%) population access to bank accounts. Almost all (97% of local citizens) are using some kind of digital payment type, and almost 80% leverage digital wallets, though with varying frequency for different purposes. For instance, 27% of consumers in Singapore prefer cash-on-delivery service for online purchases, and 15% use cash for in-store shopping. Nevertheless, with convenient payment systems like Singapore Quick Response Code (SGQR), Fast and Secure Transfers (FAST), PayNow and cross-border payment linkages, the country ranks high in terms of cashless adoption.
Sweden
Sweden is widely recognised as one of the most advanced cashless societies globally. It has a very low ATM penetration (28 ATMs per 100,000 adults), and high e-commerce adoption (77%). Today, approximately 90% of all purchases in Sweden are made using digital methods, such as cards or mobile payments like Swish – an A2A payment app that handles more than 83 million transactions monthly. The amount of cash in circulation has declined to about 1% of the country’s GDP. At the same time, around two thirds of the companies in the country, especially those selling essential goods, accept cash as a payment method to not discriminate against vulnerable population categories. Moreover, due to recent security concerns and geopolitical uncertainties, Swedish authorities have emphasised the importance of maintaining cash as a backup payment method.
China
China was cash-centric just fifteen years ago until major mobile wallets came along and went mainstream. Today, over 80% of local transactions are digital. About 86% of Chinese citizens have embraced mobile payments, which account for over 70% of the total transaction volume. Over half of locals use exclusively mobile payment methods, even in towns and rural areas. And yet, there are some limitations to China’s status as a cashless economy. Firstly, foreign visitors find it difficult to make digital purchases in the country as local mobile wallets are not widely used elsewhere. Second, and most importantly, 14% of local citizens who do not use mobile wallets equal not less than 196 million people, that is an aggregate population of a few smaller countries.
Australia
Australia is rapidly transitioning to a cashless society as well. Today, cash contributes just to 13% of all local payments. Approximately 76% of all payments are made using bank cards. Moreover, almost all (94%) in-person card payments are contactless. About one-third of them are made via mobile devices, indicating a growing preference for digital wallets and mobile banking. Credit card penetration in the country is close to 70%, being the most popular online shopping payment method. The number of ATMs across the country is rapidly declining, with some predictions stating that Australians might not be able to access a single ATM across the country by 2055 under current trends. However, some local citizens protest against the cashless movement, believing that it might disproportionately affect seniors and vulnerable populations, as well as leave people unprepared for emergencies and crises.
Bottom Line: Cash Doesn’t Go Away
The given examples are just a few illustrations of modern societies wanting to embrace digital payments to the fullest extent. However, even in the most fintech-friendly destinations, eliminating cash altogether is hardly an option. Even the countries which are nearest to their cashless aims understand the implications of a full cash ban. If cash is no longer used, who’s going to provide each and every citizen with a bank card, internet connectivity or mobile phone to pay for essentials? That’s a rhetorical question.
Besides, many countries today are worried about their future in this highly unstable geopolitical environment. Emergencies and disruptions of a critical infrastructure are a valid concern in times of a global crisis. While some countries are already exploring ways to enable offline card payments on a national level, these are still projects in development, so stacking some cash for unexpected scenarios is still the easiest choice.
