Digital World

Digital worldSometimes Americans are accused of failing to realize there are other countries outside its borders. Whether or not the reputation is deserved, this American is well aware of the rest of the world. This week, I’m taking a look at the state of going cashless in others’ backyards.

Going cashless seems to be moving forward at a rate that suggests the word snowballing. I should add a note of caution: It can be in a country’s and its banking system’s best interest to produce glowing reports, so it may be wise to filter claims through an appropriately skeptical lens here or there.

I’ll start with the United Kingdom, for which the Daily Mail predicts 2018 will be “… the year that the UK reaches “‘peak cash,’ in which debit cards are used for more purchases than coins or notes.”

In 2006, 62 percent of payments in Britain were made [using] cash, while in 2016 this figure had dropped to 40 percent, the data shows. By 2026, its predicted cash transactions will make up just 21 percent of the UK’s payments, according to UK Finance, which represents leading banking firms. …

Bank of England data shows that while the volume of cash in the economy continues to rise each year with inflation, it is now doing so at the slowest rate since 1972.

Speaking of the UK, British Overseas Territory and picturesque island nation of Montserrat has signed a “memorandum of understanding” with Barbados-based cryptocurrency company Bitt. The goal is “… to launch a digital payments ecosystem in the Caribbean island.”

Montserrat Premier and Finance Minister Donaldson Romeo said: “The decision to move closer to a cashless society is in keeping with our overall development strategy, and also that of the ECCB [Eastern Caribbean Central Bank].

Looking to the Middle East, the United Arab Emirates (UAE), according to Mastercard’s Girish Nanda, GM, UAE & Oman, as quoted by, is “…fast emerging as the FinTech hub of the Middle East.” Futhermore,

“There isn’t a more fertile ground for digital transformation than the UAE,” according to Promoth Manghat, CEO, UAE Exchange …

… the UAE being an expatriate hub with travel requirements rampant, Gocash is just the answer to the market’s needs, according to Manghat. Users of the Mastercard-powered card have a choice to load up to six different currencies from a bouquet of over 20, providing a boon of convenience to travelers.

In Venezuela, digital payments may offer not just an alternative but a much-needed solution. With the country’s ongoing hyperinflation, every day the same transaction requires more bolívars (about 4¢ U.S. as of this writing) than the day before. Unable to crank out currency to keep up with demand, Venezuela’s central bank has capped the amount of currency that can be withdrawn in a day. Digital payments, which I need hardly point out do not require physical production, alleviate the problem.

An exception to the glowing-claims trend is a recent study by the Internet and Mobile Association of India. As I reported last year, the Republic of India has committed to a cashless future, but the study reveals that “only 16 percent of rural users access Internet for digital payments.” As reported by LiveMint, the cause may be identifiable:

Lack of electricity to charge devices, poor network quality and affordability of Internet service packs are the reasons for such behaviour and unless this trend is reversed, usage purposes will remain skewed and offtake of digital payments will remain restricted, the report said.

While reports are for the most part encouraging, each contains a caveat: Concern for populations whom going cashless threatens to exclude. Usually that’s the elderly, the poor, and the unbanked.

In that regard, reports Emily Price in Fortune, progress toward digital payments in Sweden has been perhaps too good. There, a proliferation of retail businesses no longer accepting cash threatens to place in a bind the elderly, many of whom may not be technologically adept, and the poor, many of whom don’t have bank accounts at all.

Yet in Rwanda, Dr. Jaya Shukla, writing for The New Times, claims that digital payments could ultimately put more money in the pockets of the poor—or at least take less money out:

One of [the] reasons for success of mobile payments is low transaction costs. In Kenya M-Pesa was routinely one-third to one-half as expensive as alternative systems. Lower costs directly translate into money the poor can keep …

… digital payments are making financial services more universally affordable and accessible and, therefore, have the opportunity to drive financial inclusion in developing countries.”

Shukla does not address one sticking point. According to Internet World Stats, in mid-2017 only 30.6 percent of Rwandans had even Internet access, let alone mobile devices. Shukla may be promoting an official state position, not necessarily a research-based one.[1]

Overall, the trend toward cashlessness in general and digital payments in particular appears strong. Even outside my home country.

[1] The New Times claims it is an independent newspaper, however, the Human Rights Watch has called it a “state-owned newspaper.” Clicking the Times’s About us tab wasn’t terribly helpful in sorting that out. Here is the page’s text in its entirety: “Saturday 25th June, 2011 / Page being updated.”

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