By Shane Leahy, CEO of Tola Mobile
From paying for a parking ticket to placing a bet on a sports match, consumers around the world are now increasingly opting to complete for day-to-day transactions directly through their mobile device. With mobile payments now widely perceived by consumers as the most simple and convenient way to purchase goods and services, there has been a huge shift amongst previously cash-centric industries towards offering customers a range of alternative mobile payment methods, to increase convenience for their customers and drive their own conversion rates.
The surge in adoption of mobile methods, which remove the need for physical cash to make a purchase entirely, has undoubtedly taken their toll on the traditional notes and coins of yesteryear. As more solutions emerge, each presenting both consumers and businesses with new ways to streamline their payment processes, its position as the world’s most frequently-used payment option is now under significant jeopardy.
As a result, we are inevitably now witnessing a steady decline in cash use across most countries worldwide. In the UK alone, it is now estimated that notes and coins will be used for just 21% of all consumer transactions by the year 2026, a trend which has undoubtedly also been replicated across other regions over the last few years, especially across Sweden and Canada.
In particular, we are now seeing a rapid shift towards cashless payments across the more developing regions of the world. Despite being home to millions of unbanked people who are unable to use credit or debit cards to pay for goods and services, most consumers within these markets are no longer opting to use cash as their day-to-day payment method. Instead, they are now increasingly favouring mobile money accounts to transact both securely and conveniently.
The technology’s ability to provide easily accessible funds on almost any mobile device has been fundamental to its widespread uptake within developing markets, growth which is especially evident across the Sub-Saharan region of Africa. This region has been the largest early adopter of mobile money as an alternative to physical cash payments, so much so that there are now 338m registered mobile money accounts across various countries across the market.
However, we are now also seeing a huge growth in demand for these services, not only across Africa but also across other regions. According to the GSMA, there were 276 million mobile money deployments across 90 countries last year. Deployments such as these have undoubtedly been key drivers in the decreasing amount of revenue generated by cash around the world. Last year alone, the mobile money industry processed $1 billion in transactions every day, producing a direct revenue of more than $2.4 billion.
Prior to the evolution of mobile methods, many of these transactions would have been completed using cash within a store. Yet, by removing the need for physical notes and coins, consumers are now being empowered with the freedom of conducting payments anywhere, at any time.
Not only is this growing preference towards a cashless culture impacting the decisions of consumers; the global demise of physical cash is also causing a huge shake up in the way merchants and service providers choose to facilitate customer transactions. Recent research predicted that consumers will make 726 billion transactions using digital payment technologies globally by 2020, a shift which merchants around the world are now adapting to by relying less on cash payments and integrating more mobile-focused methods into their strategies.
It is the same changing consumer behaviours towards cash payments which are enabling merchants to streamline their payment processes and improve customer payment experience through the deployment of mobile-focused solutions and unconsciously removing the need for cash payments in many previously cash-dominant industries, such as betting, gambling, hospitality or ticketing.
Looking ahead to the future of cash in societies worldwide, we are by no means on the cusp of witnessing the complete removal of cash as a globally recognised form of payment. However, with mobile payment methods evolving at such fast pace and the preference towards cashless transactions growing simultaneously, the global demise of physical cash has inevitably already begun and will continue to increase as mobile methods advance their stronghold across the payments space.
Global Banking & Finance Review
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