While cash might not be dead just yet, there's no debate that digital payments are the future – and all types are set to skyrocket in the coming years.
According to analysts, the total value of digital payments across the world could be in the region of $10 trillion by 2026. The huge increase in adoption levels is being driven by growth in both old and new types of digital payments.
Among more established types of digital payments, part of the rise is coming from greater use of debit and credit cards – particularly to make contactless transactions – at the point of sale (POS). On the newer side, payments made using mobile devices are inspiring growth in cashless payments. Among retailers, 37 per cent now have POS systems that can accept NFC and mobile payments. The number is only set to rise in future: a report published last year by analysts Berg Insight predicted that eight out of 10 POS terminals support NFC payments by 2022, meaning they can accept tap-and-pay payments from both contactless bank cards or NFC-enabled smartphones.
Apple and Google are also helping to push the NFC and mobile payments space forward. Apple CEO Tim Cook recently said that Apple handled 1.8 billion mobile contactless payments in the last three months of 2018; there are also thought to be 383 million Apple Pay users in the world currently. The Google Pay app, meanwhile, has racked up over 100 million downloads from the company's Play store.
Digital wallet apps, such as Apple's and Google's, are becoming increasingly common: by the end of this year, more than two billion people are expected to have used a digital wallet, a rise of nearly 30 per cent year on year, with that figure predicted to double within five years.
And it's not only better availability of the hardware needed to make digital payments that's helping inspire more people to go cashless around the world: it's also simply the spread of internet connectivity, and increasing digitisation of various everyday services in retail, government, and elsewhere.
Emerging technologies such as cryptocurrencies, as well as the greater spread of mobile banking, are also contributing to the rising tide of digital payments.
Financial services and banking industry will, perhaps unsurprisingly, be the biggest adopter of digital payments across the world. By 2026, it will account for 22 per cent of all digital payments, according to Reports and Data, while over the next five years, its use of such payments should grow by over 15 per cent.
The same report suggests the Asia Pacific region will be among those leading the way on digital payments. The region will make up over one-third of all digital payments in 2026, with a total value of $3.62 trillion. Over the next five years, the use of digital payments is forecast to grow by 19 per cent.
The region will be among the biggest adopters of digital payments due to a number of factors, including higher take-up of digital payments technologies, as well as a faster pace of product development. Governments in the region have also helped by driving awareness of digital payments, leading to greater uptake.
North America will also generate around one-third of all of the world's digital payments in 2026, albeit at a slower growth rate than Asia Pacific: North America is expected to grow at a rate of just under 13 per cent over the next five years. The sizeable adoption of digital payments in North America is attributed to the ease of going cashless in the region.
Nonetheless, cash is still king. Research by security company G4S found that cash use continues to rise globally, with cash in circulation now the equivalent of 9.6 per cent of the world's GDP, compared to 8.1 per cent in 2011. In some regions, such as the Middle East and Asia Pacific, the rise in online retail hasn't put paid to cash entirely – in some countries, nearly three out of four purchases made online are paid for on delivery using physical cash. There's currently thought to be $5 trillion of cash in circulation around the world.