The rise of mobile and contactless payments means that by 2026 cash will account for less than a quarter of all transactions in the US, according to research from law firm Paul Hastings and the Centre for Economics & Business Research (Cebr).
The increase of electronic payments use, from 63% of transactions today to 76% in 10 years times, means that the value of non-cash payments in the America will reach $44 trillion.
In the UK, the demise of notes and coins will be almost as great, with the percentage of transactions not involving cash growing from 55% in 2016 to 68% in 2026, bringing total non-cash payments to £1.44 billion.
Much of the move to e-payments will be driven by contactless payments, which will see their numbers grow in the US from 38 million this year to 221 million in 2026. In the UK the rise will be from 3.3 million to 19 million.
While contactless cards are already ubiquitous, at least in the UK, the research shows that mobile payment options – from Apple Pay to banking apps to Zapp – are still failing to capture the public’s imagination.
Uptake of alternatives such as digital wallets by consumers is still low at six or seven per cent. Moreover, the survey finds apps and access to alternative payments are largely irrelevant when it comes to switching accounts. In fact, over a quarter in the UK and almost four in 10 in the US do not use any alternative payment method at all.
Paul Hastings argues that there are three reasons for this: First, the industry hasn’t fully allayed consumers’ fears over data security (49% in the UK and 46% in the US), theft (45% and 41%) and fraud (59% and 46%).
Second, the regulatory landscape remains inconsistent – at times fostering, but still often discouraging (particularly in the US), innovation. Finally, there are significant barriers – both regulatory and structural – that make the financial services environment more challenging than many other industries for those wishing to innovate.