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Cash is here to stay - cards are the true dinosaurs

Far from sounding the death knell for cash, the rise of digital payments will instead lead to the extinction of the plastic card, according to Deutsche Bank research on the future of payments.


Cash is here to stay - cards are the true dinosaurs


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The paper takes a contrarian view from the popular assumption that the days of notes and coins are numbered, instead forecasting that cash will be around for decades to come due to a deep-rooted trust in its value during uncertain times.

"When people discuss the future of payments they tend to predict the end of cash," the study states. "Our view is different. Not only do we think cash will be around for a long time, we see the transition to digital payments as having the potential to do no less than rebalance global economic power."

Instead, the coming decade will see digital payments grow at light speed, leading to "the extinction of the plastic card", as mobile payments come to comprise two-fifths of in-store purchases in the US, quadruple the current level.

Similar growth is expected in other developed countries, however, different countries will see different levels of shrinkage in cash and plastic cards. In emerging markets, the effect could arrive even sooner, where many customers are transitioning directly from cash to mobile payments without ever owning a plastic card.

For a glimpse into the future, the analysts look to China, where the value of online payments is equivalent to three-quarters of GDP, almost double the proportion in 2012. Today, just under half of in-store purchases in China are made via a digital wallet, way above the levels in developed markets.

Deutsche Bank is also bullish about the potential for private digital currencies, pointing out that if the growth in blockchain wallet users continues to mirror that of internet users, then by the end of the decade, they will number 200 million, quadruple the current level.

"This will be encouraged by governments, banks, corporates, and payment providers who all stand to benefit from the digitalisation of payments," the paper notes. "And when countries and companies eventually look back at the way they transitioned to digital payments, it may become very apparent how they achieved their standing in the world economy."

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Comments: (6)

James Cranfield Managing Director at Insight Consultancy UK Ltd

John Cryan the then CEO of Deutsche Bank (who commisioned this research) tweeted in Davos in 2016 that cash will be gone in 10 years: 

Cash, I think, in ten years’ time probably won’t exist. There will be no need for it: John Cryan  http://wef.ch/1ny9SBa   #wef #futurefinance

This article poses a very different view.  Both are clearly wrong.  Nothing is here to stay.  Nothing.  It's not a question of whether cash will go, but when cash will go.  10 years?  No.  50 Years? In some countries, yes.  In 100 Years?  Probably.

To say that cash is here to stay is as ludicrous as saying that cash will disappear by 2016.  IMHO


A Finextra member 

As the saying goes "cash will be around as long as society has prostitution, illegal drugs and tax evasion." As a German I can report my fellow citizens like to indulge in all three. If anyone wants to question that, one only needs to look at how many properties were bought by Germans in Spain for cash in the run up to the Euro being introduced. Of course it does beg the question "what will we use for our cocaine if we don't have a plastic card in our wallet?"

A Finextra member 

"deep-rooted trust in its value during uncertain times"? This sounds like it's referring to those that don't trust banks and keep their savings under their matress. 

Surely digtial payments will eat away at cash usage as well as card usage. Look at digital societies like Estonia - I'd say I use cash 3 or 4 times a year.

The growth in cheap card tap technology has meant even Big Issue sellers can accept cards as opposed to cash (a further point that cash is dying out).

I'm no economist or multinational bank, but I feel like Deutsche Bank are way off on this.

Nick Collin Director at Collin Consulting Ltd

I agree.  Deutche Bank seem to have got it wrong this time.  Both cash and cards will be around for very many years IMHO.

Ketharaman Swaminathan Founder and CEO at GTM360 Marketing Solutions

Some people predicted that iPhone with NFC will kill Plastic Credit Card over 5 years ago on these very pages of Finextra. Some others have been predicting that Mobile Wallets will replace Plastic Card the next year for the last 10 years. 

Why blame DB. It's just one more party that's trying to be cool and generate a few pageviews and clickthroughs.

A Finextra member 

This question of the extinction of the payment card is misleading. 

What is a payment card?  It is the carrier of a set of credentials, A means of Identification offering financial Attributes capable of being authenticated by a party seeking to sell something to the individual or entity presenting the credential as a mechanism to assure payment. ... https://andreae.com/2020/01/24/the-card-was-and-is-only-a-credential-carrier/


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