Many countries are switching to a digital economy as a way to better fight shadow businesses and crime, increase control over flows of money and reduce the responsibilities that come with keeping cash in circulation. Here are five countries that are making the move to get rid of cash:
- Sweden – Swedes are the closest to getting rid of cash, with only 2% of all payments in Sweden being made using traditional banknotes and coins. Cash now accounts for less than 20% of payments in stores, a figure three times less than in other European countries. In the near future, the country plans to limit the cash payments to a maximum of approximately EUR 6.
- France – France has been steadily moving towards a digital economy since 2014. Currently, 92% of payments are non-cash, and 70% of the population uses bank cards. Cash is used mostly for small purchases or EUR 25 or less.
- The United Kingdom (UK) – the UK began transitioning in 2013 and has adopted a softer approach to going cashless than France or Sweden. Still, 30% of the population has stopped using cash, including 51% of young people. It is estimated that by 2022, 80% of the population in the UK will refuse to use cash.
- Turkey – a few years ago, Turkey recorded a huge increase in the equipment necessary to process plastic card payments. This stemmed from legislation that placed high commissions on purchases where the retailer bank and customer bank where different. To work around this, retailers began installing several terminals, with each tied to a separate bank.
- China – China’s unique legislative restrictions on banking have led to the development of state-issued ID cards that act as everything from passport and work permit to diploma and payment device. Using the cards, however, required a point-of-service (POS) terminal. This led to the mass production of POS terminals and, eventually, China becoming the world leader for non-cash payment equipment. In three short years, the country made the move against cash and for a digital economy. In 2017 for example, USD 5.5 trillion in payments was made via digital channels, five times more than in the United States.