Payments Innovation and the Use of Cash

Abstract

Pundits have been predicting the death of cash for as long as the plastic card has been in existence – more than 60 years. This perception has been intensified of late by the rapid acceleration in payments innovation, driven in large part by the mobile phone, in both developed and developing markets. The authors assert that the existing ways of measuring cash are inadequate for measuring cash usage and have devised a new methodology and framework for measuring how much cash is used by consumers to pay for things at merchants. This paper provides an overview of this methodology by applying it to 10 countries: France, Italy, Germany, Poland, Portugal, Spain, Sweden, UK, and US. The authors conclude that although payments innovation will impact the consumers’ use of cash, significant impacts will take at least a decade to be felt.