In a cash-driven economy like India, the surprise announcement of demonetization hurt the market on account of its dependency on the value attached to physical currency. It changed the consumer behaviour drastically, introducing a majority of us to the world of virtual money. Card payments have grown multi fold in recent years and today, you have options galore because there are cards to suit your specific purchasing habits. For instance, with special EMI cards available on Finserv MARKETS, you can shop for consumer durables, furniture or apparel, footwear, eyewear or even groceries at a retailer of your choice.
The meteoric rise of platforms like Paytm and Mobikwik proves that finally, India is on the path to becoming a ‘less cash’ economy, if not cashless. India is relatively new to this game, and is now following the footsteps of many other, mostly western countries, with the exception being China.
Sweden: Sweden is the first country that comes to mind when one talks of economies that have ditched the cash. One of the most well-connected countries in the EU, Sweden has a relatively small population with historically low levels of corruption, making the transition into a cashless economy much easier. Sweden’s swift escalation to being at the forefront of this transition has also been enabled by the fact that it is a global pioneer in digital technologies.
Many local bank branches have stopped letting people take out cash or even bring cash into the bank. According to a nationwide survey conducted last year, merely 13% of Swedes reported using cash for a recent purchase. Back in 2010, this figure stood at a considerable 40%, demonstrating a remarkable shift in consumer behaviour over the past decade. The country aims to go completely cashless by 2023.
Canada: According to Visa, Canada has one of the highest penetrations of card-based payments in the world – more than 70% of personal purchases in Canada are card-based. A full 25% of retail e-commerce transactions are now being made on mobile devices.
A research analysis of the world’s leading cashless economies has declared Canada the top country that’s embracing the cashless technology. A very close second, according to the analysis, is Sweden, which is now scrutinizing the impacts of going completely cashless. The research, conducted by Forex Bonuses, looked at 20 of the world’s top economies, with only the top 10 ranked.
China: The significant growth in non-cash payments in China appears much more pronounced given the fact that it’s the world’s most populous country. One of the strongest economies in the world, China has, to an extent, leapfrogged the credit and debit card revolution that overtook the advanced economies in the last century, with most of the new adopters using mobile technology for most of their financial transactions.
China is already the world’s largest mobile payment market and according to the country’s central bank, 66.5% of its rural population was already using digital payments by 2017, while the country as a whole stood at 76.9%.
UK: Over the last ten years, cash payments in the UK have dropped from 63% of all payments to 34.5%. This has been mainly attributed to a substantial increase in the debit card payments. Nearly 98% of adults have a debit card and there were 13.2 billion debit card payments in 2017, up 14% from 2016. According to the country’s banking body UK Finance, over two-thirds of UK adults used online banking and nearly half used mobile banking in 2018 for their financial transactions.
Meanwhile, the number of contactless payments made in the UK surged by 31% in a year to reach 7.4 billion in 2018. Around seven in 10 people in the UK now use contactless form of payment for their transactions.
US: According to a report published by the country’s Fed Reserve last year, cash represented 30% of all transactions and 55% of transactions under $10.
According to the country’s Federal Deposit Insurance Corporation, 68.7% of U.S. households had a credit card in 2017. According to the Harvard Business Review, more consumers are now using their credit and debit cards for smaller purchases. In the past four years, the use of cash for transactions under $20 has dropped from 46% to 37%. This behavioral shift implies that American consumers no longer perceive these cards to be strictly for hefty purchases or emergency financial needs. They have become increasingly comfortable using their debit or credit cards to finance their day to day needs.
Digital transactions come with a lot of benefits like accessibility and ease, reducing tax evasion, corruption, etc. However, a complete transition to the other side of the fence runs the risk of ignoring those who don’t have credit cards or bank accounts, have difficulty using smartphones/computers, or have poor wireless connectivity to conduct their financial transactions.
Talking of India, the consumer behaviour is certainly changing, and for the better. Millennials are now making informed choices while going cashless. For instance, with Bajaj Finserv’s EMI cards available on Finserv MARKETS, an increasing number of consumers who do most of their shopping online are, paying lesser EMIs than usual. In these EMI cards, each transaction functions like an interest-free loan. This helps you save on EMI payments, especially compared to paying big credit card debts which often burns a hole in your pocket and sometimes, makes you regret some of those purchases.
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