For the past 3000 years, when people thought of money, they thought of cash. From buying food to settling bar bills, day-to-day dealings involved paper or clinking bits of metal. Over the past decade, however, digital payments have taken off — tapping your credit card on a terminal or using a smart phone has become normal. Now this revolution is about to turn cash into an endangered species in some rich economies. That will make the economy more efficient, but it also poses new problems that could make the change victim.
Countries are eliminating(消除) cash at varying speeds. But the direction of travel is clear, and in some cases the journey is nearly complete. In Sweden the number of retail cash transactions per person has fallen by 80% in the past ten years. Cash accounts for just 6% of purchases by value in Norway. Britain is probably four or six years behind the Nordic countries. America is perhaps a decade behind. Outside the rich world, cash is still king. But even there its dominance is being weakened. In China, digital payments rose from 4% of all payments in 2012 to 84% in 2020.
Cash is dying out because of two forces. One is demand — younger consumers want payment systems that plug seamlessly(无缝地) into their digital lives. But equally important, suppliers such as banks and tech firms (in developed markets) and telecoms companies (in emerging ones) are developing fast, easy-to-use payment technologies from which they can pull data and pocket fees.
In general, the outlook of a cashless economy is excellent news. Cash is inefficient. In rich countries, minting, sorting, storing and distributing it is estimated to cost about 0.5% of GDP. But that does not begin to capture the gains. When payments disappear, people and shops are less fragile to theft. Governments can keep a closer eye on fraud or illegal tax avoidance. Digitalization vastly expands the playground of small businesses and sole traders by enabling them to sell beyond their borders. It also creates a credit history, helping consumers borrow.
