Highlights
- The strong growth in digital payments over the past decade continued in 2021. The volume and value of fast payments reached record levels.
- Even so, digital payments have not yet fully replaced cash. Public demand for cash remains steady, both as a means of payment and as a safe haven.
- While the digitalisation of payments is a global trend, payment habits still differ across countries. Interoperability of payment systems within and between countries is key to ensuring that payments can be made seamlessly, regardless of the chosen payment method.
Introduction
Digitisation is changing the way people pay. Over the last decade, technological innovations have enabled new access modes, such as online banking and mobile apps. This has helped consumers and businesses to migrate away from cash and cheques towards electronic payments, including card payments, electronic fund transfers and e-money payments. In addition, an increased demand for convenience and speed has resulted in a growing use of contactless and fast payments.
Some of these trends accelerated with the Covid-19 pandemic in 2020. The 2020 Red Book statistics (as well as other studies) were already pointing to a significant uptake in digital credit transfers and contactless card payments. At the same time, the pandemic led to a surge in cash holdings.
This CPMI Brief documents the extent to which these trends continued using the 2021 Red Book statistics collected in the second half of 2022 for the 27 member jurisdictions of the Bank for International Settlements' Committee on Payments and Market Infrastructures (CPMI).
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FAQs
Digital Payments Make Gains in Gaming But Cash Remains King
Should digital payments replace cash? ›
One of the biggest drawbacks is the risk of theft or loss. Cash can be easily stolen or misplaced, while checks can be lost in the mail or stolen from a mailbox. In contrast, digital payments are more secure and can be easily tracked and monitored, reducing the risk of fraud or theft.
What are the negative effects of digital payments? ›
Dependence on Technology:
The reliance on technology for digital payments exposes businesses to the risk of disruptions. Technical glitches, server downtimes, or system failures can temporarily halt transactions, leading to potential financial losses for businesses and inconvenience for customers.
Why is cash payment better than digital payment? ›
Reduced travel time and cost of collecting payments:
When payments are made in cash, distribution typically occurs in a government office or similar location, with restrictions on the day and time for recipients to collect their payments.
Is considered as a drawback of digital payment? ›
In conclusion, virtual payments offer many advantages, including convenience, security, and reduced costs. However, there are several disadvantages to consider, such as technical issues, security risks, and limited consumer protection.
Will cash become obsolete? ›
It might seem like cash is slowly becoming obsolete. But, Brett Scott says it's a false narrative that we're all pining for a cashless society.
Is cash no longer king? ›
When it comes to how Americans prefer to spend their money, cash is actually not king. A 2023 study conducted by the Federal Reserve showed that the credit card was the most preferred payment method for US consumers, making up 31% of all payments.
What should be the most concern when making payment digitally? ›
Digital payments are vulnerable to security concerns such as data breaches, fraud, and identity theft. Data breaches occur when sensitive information such as credit card numbers and personal information is accessed without authorization.
What is the safest form of digital payment? ›
Generally, these are the best methods for secure online payments:
- PayPal. Safe and secure.
- Credit card. Well protected against fraudulent transactions.
- Debit card. Great for controlling your spending.
- Prepaid card. Provides a certain level of privacy.
- Digital wallets. ...
- Mobile payment apps. ...
- Cryptocurrencies.
Identity theft and compromised personal information are potential dangers in a cashless economy, but privacy might be compromised in other ways too. When you pay digitally, you always leave a digital footprint, and this footprint is easily monitored by financial institutions.
Some people still prefer to use cash, perhaps because they like the tactile nature of physical currency or because it provides confidentiality in transactions. But digital payments, made with the swipe of a card or a few taps on a cellphone, are fast becoming the norm.
What is the most popular digital payment method? ›
We asked U.S. consumers about "Most used online payments by brand" and found that "PayPal" takes the top spot, while "Skrill" is at the other end of the ranking. Find this and more survey data on most used online payments by brand in our Consumer Insights tool.
Why do people prefer digital payments? ›
Speed of transactions
For both the seller and the customer, online payments save a lot of time. People don't have to wait in lines, take time to write checks, or wait for paper bills. They don't have to wait for banks to clear their checks so that they can access the money.
What are the pros and cons of electronic payments? ›
Let us see what are the main advantage as well as disadvantages of this payment method.
- Advantages:
- Increased speed:
- Increased Sales:
- Instant Receipts:
- Better Deals:
- Disadvantages:
- Service Fees:
- Risk of Theft:
Better Payment Security
Digital payment systems use encryption and system authentication protocols, which minimise the risk of unauthorised access and effectively prevent fraud.
What is digital disadvantages? ›
However, there are also downsides to this such as dependence on an unreliable source, the risk of being hacked, the weakening of social skills and the sense of community, and the misuse of information. So, overall, is it really beneficial to us?
Will digital currency take over cash? ›
IMF says central bank digital currencies can replace cash: 'This is not the time to turn back' IMF's Kristalina Georgieva said that the public sector should keep preparing to deploy central bank digital currencies and related payment platforms in the future.
What are the pros and cons of electronic cash? ›
Pros and Cons of Electronic Cash
- The ability to move money quickly, literally at the speed of light.
- Better recordkeeping.
- Global money transfers.
- The ability to move large sums of money without any physical burden.
Analysis from Barclays Investment Bank, meanwhile, predicts that the global transition from cash to digital payments would reach a tipping point moment in 2025, when absolute cash usage would decline from 41 per cent in 2019 to 20 per cent by 2030.
