Cash survives digital payments revolution as cards go kaput

The rise of digital payments will signal the end of plastic cards, but not cash, according to a new Deutsche Bank report.

"When people discuss the future of payments they tend to predict the end of cash," it observes. "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."

Mobile payments will come to comprise two-fifths of in-store purchases in the US, quadruple the current level, it adds. Whilst in emerging markets, many people are transitioning from cash to mobile payments without ever owning a plastic card.

Deutsche Bank also draws attention to China. “We can deduce much about the future of payments from developments in China where the country is developing world leading digital payments infrastructure,” it says.

“There, 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.”

Backing Bitcoin

As for digital currencies, whilst many are sceptical about them, citing the large energy needs and pointing out that the likes of Bitcoin and Facebook’s Libra have encountered significant regulatory hurdles, Deutsche Bank is bullish.

“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,” it states.

“This will be encouraged by governments, banks, corporates, and payment providers who all stand to benefit from the digitalisation of payments. 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.”