لخّصلي

Retail payment systems continue to become faster and more convenient.As the appetite for cash remains unabated, few societies are close to "cashless" or even "less-cash". In fact, demand for cash has risen in most advanced economies since the start of the Great Financial Crisis. This resurgence appears to be driven by store-of-value motives (reflecting lower opportunity cost of holding cash) rather than by payment needs.1

JEL classification: E40, E41, E42. Like "the times" in Bob Dylan's song, the ways we pay are a-changin'.New electronic payment (e-payment) services are emerging around the world and are increasingly instant, ubiquitous and available around the clock (CPMI (2016), Bech et al (2017)).Yet, despite increased use of electronic payments around the world, there is scant evidence of a shift away from cash.In Denmark, for example, church collection boxes and street performers now accept mobile payments.In most advanced countries, cheques have disappeared or are dying a slow death.Credit or debit cards are now accepted by all but a few merchants.Many types of payment usually done with cash are going electronic.

Retail payment systems continue to become faster and more convenient. Yet, despite increased use of electronic payments around the world, there is scant evidence of a shift away from cash. As the appetite for cash remains unabated, few societies are close to "cashless" or even "less-cash". In fact, demand for cash has risen in most advanced economies since the start of the Great Financial Crisis. This resurgence appears to be driven by store-of-value motives (reflecting lower opportunity cost of holding cash) rather than by payment needs.1

JEL classification: E40, E41, E42.

Like "the times" in Bob Dylan's song, the ways we pay are a-changin'. In most advanced countries, cheques have disappeared or are dying a slow death. Credit or debit cards are now accepted by all but a few merchants. New electronic payment (e-payment) services are emerging around the world and are increasingly instant, ubiquitous and available around the clock (CPMI (2016), Bech et al (2017)).

Many types of payment usually done with cash are going electronic. In Denmark, for example, church collection boxes and street performers now accept mobile payments. In China, fast food can be bought using "smile to pay" facial recognition technology. In the United States, college students pay for pizza and beers using apps that broadcast the purchases to their social media friends.

In general, innovations are putting the traditional bank-based payment system under pressure both within and across borders (CPMI (2015)). The proliferation of mobile phones has, in some developing countries, allowed payment systems to leapfrog those in more advanced economies. For example, in Kenya and other places, mobile payments flow without bank accounts.2 Going forward, cryptocurrencies as well as fintech applications - the subject of feverish innovation by both small startups and large firms - will likely further disrupt existing business models. In addition, some central banks are considering the need to issue a digital version of cash (eg Sveriges Riksbank (2017b)).

On the face of it, all this points to a shift away from cash (ie notes and coins). However, the data, so far, say otherwise. Based on the "Red Book" statistics3 on payment, clearing and settlement systems collected by the Committee on Payments and Market Infrastructures (CPMI),4 cash in circulation and card payments (a proxy for e-payments) have both increased since 2007.5 Only Russia and Sweden show evidence of substitution between cards and cash (Graph 1).6