Can Digital Payments Replace Cash Payments?

October 11 2021

Carolina Fabara

Technology has revolutionized the way people shop, sell, and save, and people are increasingly moving away from using cash. Even though, the rise of these digital payment systems and electronic banking has led to debates among economists, business experts, and the public about the future of cash. Recent studies states show cashless transaction volumes will increase by over 80% to 1.9 trillion by 2025 and that digital payments per person will triple by 2030. The coronavirus pandemic has accelerated the switch from cash to digital payments by three to five years. The strongest growth is expected for the Asia-Pacific markets, where the volume of cashless transaction are likely to increase by 109% by 2025 and by a further 76% from 2025 to 2030 (PwC).

While acceptance of cards and mobile payments is increasing in Europe, some larger European economies, especially Germany, still have more cash than cashless transactions. However, it is important to consider some relevant facts such as the accessibility of cash to wider public, including to people who don’t have bank accounts. Thus, the existence of cash ensures those without bank accounts and access to technology are not left on the sidelines. Additionally, cash is the only payment instrument that guarantees the user’s privacy and anonymity, while all electronic transactions are traceable. Privacy is an individual right and choice, and many people wish to pay for products and services anonymously. The downside of digitalization and widespread connectivity is that individuals can hardly keep control of their personal data. Consequently, in this new monetary world, financial institutions play an integral role in the protection of personal financial data.

Digital payments can offer consumers and businesses convenient, tailored, and flexible ways of making purchases. Increasingly, they can also offer additional services, such as ways to help budget, or keep a record of transactions. They also reduce the opportunities for the minority who use the anonymity of cash to evade tax and launder money. It is because high denomination notes are the payment instrument of choice for those evading taxes, committing crimes, financing terrorism or giving or receiving bribes. Cash offers anonymity, leaves no transaction record and is universally accepted.

Cash, on the other hand, continues to play an important part in the lives of many people and businesses in the UK, whether as a budgeting tool or as a cheap and convenient method of payment (HM Treasury). However, the government has already made digital payments simpler, quicker, and cheaper.  Due to the fact that cash can no longer just be seen as a commercial issue, it is a matter for public policy. And it will need everyone involved in the system such as government, regulators, retail banks and consumer groups to work together to take forward our recommendation. . It is important to see what the government will do to remove barriers to digital payments. As well as understand more about the costs and disincentives that still exist in making digital payments, and whether the government could play a greater role in addressing them.

In China, mobile payment apps have drastically changed day­to­day transactions in cities over the last five years. Some stores, markets, and food stalls in urban centers no longer accept cash payments. Additionally, the growing acceptance of online and mobile banking, as well as e­commerce businesses such as Amazon, have normalized the idea of conducting financial transactions digitally. Within the last two decades, a number of payment service providers have emerged to allow more businesses to accept cashless transactions. This means that globally, the cashless payments will continue to increase.

Finally, all international payment transaction players should invest more in competitive payment solutions as this offers new revenue opportunities for the industry, especially for banks and alternative payment providers. Digital payments could replace cash payments by investing in greater cybersecurity measures and educating consumers on the safe use of digital payments will help build the trust necessary for more widespread adoption of cashless payment options.


PwC, “Payments 2025 and Beyond”, Accessed 10 October 2021.

HM Treasury, “Cash and digital payments in the new economy: call for evidence”, Accessed 10 October 2021.