Katy Gibson in PaymentsSource is worried that the US is falling behind other nations in becoming cashless (when did that become a goal?):
“Cashless technology has evolved to simplify business operations while simultaneously satisfying consumer demands.
Beyond eliminating the exchange of coins and paper bills, contactless payments shorten transaction times, eliminate inaccuracies, create retrievable records and remove the threat of counterfeit money.
Economies across the globe are adopting cashless technology through innovative payment apps and digital services. The U.S. market, however, is lagging behind.
- According to the 2017 World Payments Report, non-cash transactions increased by almost 11 percent in recent years. Countries like Sweden are paving the way to making cashless societies a reality. Only 19 percent of Swedish payments are now made using cash.
- In 2015, more than half of the Swedish population was using Swish, a mobile payment app that allows safe, free and instant digital transactions. This trend has also been observed in Kenya, where a mobile transfer service, M-Pesa, is used by more than 30 million people for international transfers, loans and health provision.
- The U.S. is far from universally adopting cashless technology. According to the 2018 Global Cash Report, cash represents 32 percent of all payment transactions in North America. Cash remains a reliable source of payment in the U.S., dominating small-value transactions.
- In the absence of centralized regulatory systems like those of certain European nations, vendors resist implementing digital payments, due to fees from credit card issuers. Additionally, digital tools are not ubiquitous to everyone — marginalized populations such as the elderly face higher barriers in the access and adoption of new technology due to lack of knowledge and privacy concerns.”
Not mentioned in this article are the systemic and societal differences that also shape the deployment and use of electronic payments. The US payments infrastructure is hundreds of times larger and has far more participants that any European country. European countries tend to have banking operated by the government or available to all. The US banks are profit driven and our society has a not insignificant number of underbanked and unbanked. How these people will replace their cash with fancy new electronic contactless devices is a question as is who will bear the cost.
Overview by Tim Sloane, VP, Payments Innovation at Mercator Advisory Group
