- Cash to remain part of the economy for decades to come but digital payments will grow at “light speed”
- Mobile payments to quadruple in the next five years while blockchain wallets by decade end
- Cryptocurrencies have the potential to revolutionize payment standard
The latest research on “The Future of Payments,” by Deutsche Bank titled “Part I. Cash: the Dinosaur Will Survive … For Now,” talks about the existence of cash even though there would be a transition to the digital payments.
The first in a three-part series where the bank forecasts trends in cash, online, mobile, cryptos, and blockchain, it predicts that cash will be part of the economy for decades to come because people have developed a deep-rooted trust in the paper during uncertain times.
Factors contributing to Cash‘s long-term existence involves the paper money being easier to monitor the spending, faster to pay, really convenient, accepted almost everywhere, a secure method of paying, and keeping the purchases anonymous. Cash is also easier to tip and to avoid cyber-attacks on users’ money, said the 3,600 customers surveyed across the US, UK, China, Germany, France, and Italy by the bank.
Digital Payments to Grow at “Light Speed”
While cash will exist, this period will also see digital payments growing at “light speed,” which it says would lead to the extinction of the plastic cards.
Despite encountering regulatory hurdles, blockchain wallet users continue to “mirror” the Internet users which the bank expects to hit 200 million, quadruple, by the end of the decade.
Over the next five years, the German multinational investment bank says mobile payments are expected to quadruple, the effects of which are expected to arrive sooner in emerging markets.
“As China (and India) develop electronic, crypto, and peer-to-peer strategies, the epicentre of global economic power could shift,” it says.
The bank points out how China is already working on a central bank-backed digital currency that could be used as “a soft- or hard-power tool.” Companies in the country are, in fact, forced to adopt a digital yuan which Deutsche Bank says “will certainly erode the dollar’s primacy in the global financial market.”
Further experimentation expected in a post-financial-crisis environment
While providing a detailed explanation of the most famous cryptocurrency Bitcoin, it notices that BTC is a highly volatile currency. To minimize the fluctuations, fiat-backed stablecoins have been embraced whose “price stabilisation usually requires some kind of trusted intermediation or centralised infrastructure.”
Cryptocurrencies, the banks says is still in the early adoption stage but “we should expect further experimentation to take place in the context of a rapidly digitising society and a post-financial-crisis environment.”
As for the crypto adoption, though stores have started accepting cryptos as a payment method, the number is small but the growth trend is noticeable among online travel booking platforms and through retailers like AT&T and Newegg.
Payments made by Bitcoin have also taken off but they still represent a “tiny fraction” of global payments.
“Nevertheless, cryptocurrencies have the potential to revolutionise payment standards,” said Deutsche.