Cash is still king.
With the spate of mobile payment innovations, from Apple's Apple Pay to the blockchain, you would think that the days of using cash are numbered. Indeed, mobile payment transactions are growing quickly, from $8.71 billion in the United States in 2015, to a projected $27 billion in 2016. The number of people engaging in mobile transactions is also increasing rapidly, from 23.2 million in 2015 to 37.5 million in 2016, a jump of over 60%. Despite these impressive growth numbers, cash usage is resilient, and it will remain so for decades to come. Some 85% of transactions worldwide are conducted using cash, according to MasterCard.
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1. Cash Is Universal
Mobile payment systems are "rich people" products. That is, you likely need a smart phone and bank account to engage in most mobile-based transactions. But even in the United States, 17 million people don't have bank accounts and 51 million are "under banked," meaning they have bank accounts but rely on other financial providers like cash checking services. Check cashing providers charge anywhere from 2%-to-5% or even more. The world's unbanked population is staggering at 2 billion.
"Whereas alternative payment instruments are increasingly specialized and dedicated to a specific type of transaction, cash is used for a broad range of transactions, in terms of value, the channels employed..." writes Lepecq.
Everyone can use cash no matter their station in life, from those in developing countries to advanced ones. In the United States, cash is used to settle over 60% of transactions $10 or less. That's true elsewhere as well: Cash is still the preferred payment method for small ticket items in many developed countries.