PURCHASE, NY -- Belgium, France and Canada are the countries closest to being nearly cashless, according to MasterCard's new global report. "The Cashless Journey" tracks how 33 major economies are progressing from cash-based to cashless societies. It identifies new technologies, government programs and consumer preferences as key factors that are driving the shift.
The study focuses on the value of all consumer payments ($63 trillion), including those that happen beyond the retail point-of-sale. In 2011, 34% ($21 trillion) of total global consumer spending was done with cash, with cashless payments accounting for 66% ($42 trillion).
The report identifies Belgium, where an estimated 93% of the value of consumer spending was cashless, France (92%), Canada (90%), the UK (89%), Sweden (89%), Australia (86%) and the Netherlands (85%) as countries in which cashless payments are nearly ubiquitous, and attributes the broad movement away from cash to the adoption of new payment technologies on mobile phones and contactless and EMV chips, as well as modern payments infrastructures to support them.
The United States, where an estimated 80% of the value of consumer spending was cashless, and Singapore (69%) are approaching the "tipping point" to becoming nearly cashless, and remaining cash use is largely a product of consumer habit, according to the MasterCard study.
Conversely, such emerging economies as Indonesia (31%), Russia (31%) and Egypt (7%) are just starting to adopt cashless practices. They are in many cases, however, changing cash share of payments at a much faster pace than developed nations.
Having relatively recently put all the elements of a modern consumer payments infrastructure in place, Brazil (57%), Poland (41%) and South Africa (43%) are reportedly in a transition stage, and quickly shifting share away from cash.
The most rapid recent shift away from cash was observed in China, where cash share of the value of consumer payments is estimated to have declined by as much as 20% between 2006 and 2011. China, where an estimated 55% of the value of consumer spending was cashless, and the United Arab Emirates (26%) are among a group of countries whose governments have taken strong leadership in promoting electronic payments to support their social and economic goals, according to MasterCard. In Kenya (27%), disruptive technology is contributing the most to a decreased cash share of consumer spending.
MasterCard's research suggests that a country's readiness to move to a cashless society is determined by factors like the accessibility and affordability of financial services; the scale and market share of retailers; the level of technology that is available; and participation of consumers in the formal economy.
However, in Germany, where an estimated 76% of the value of consumer spend was cashless, Japan (62%), Spain (54%) and Taiwan (43%), cultural behavior appears to be keeping cash usage higher than market conditions would suggest.