The death of cash has been forecast for near on 50 years.
Initially the introduction of credit cards, and more recently the rise of contactless payments, e-wallets and cryptocurrencies, has led to generation after generation of industry experts predicting that physical money would soon become obsolete.
While consumers today have never enjoyed so much choice when it comes to completing their payments, in many countries, even in the developed world, notes and coins are still used prevalently and the concept of a truly cashless society is unlikely to materialise anytime soon.
Within the past decade, the world has reached an inflection point. Cash has been the predominant method of payment for more than 3,000 years, yet the exponential rise of technology has undoubtedly affected all areas of the economy and transformed the way that people can shop, save, transfer and exchange money.
The movement away from cash is happening in very different ways and at varying paces around the world. In Europe, 80 per cent of point-of-sale transactions are still conducted in cash and even in North America, where card payments are most regularly used, cash is still used in more than half of transactions under $25. This is not to say that non-cash payments aren’t increasing; estimates suggest global year-on-year growth of around 13 per cent between 2016 and 2021.
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Along the way, businesses are increasingly starting to recognise the incremental benefits of each advancement in payment methods, such as the reduced cost of processing cash and the time saving process it offers. Scandinavian countries are already well down this path and, in Sweden, less than 20 per cent of transactions in stores are made using cash, half the number of 2012.
A divergent picture can be seen across emerging economies. For example, in India, cash continues to thrive despite the government's demonetisation policy and only 5 per cent of transactions are cashless. A different route can be seen in Kenya where M-Pesa, a partner of Finablr, allows customers to conveniently make payments directly from their phones to the extent that the value of payments on the network represents almost half of Kenya's gross domestic product. Such outcomes are a product of each nation's distinct history, culture and investment in innovation.
Security and fungibility (mutual interchangeability) are perhaps the two ultimate reasons why cash remains king. We see this clearly in the Middle East: the demographic indicators point towards a population ready to adopt e-commerce, although the rate of adoption still lags behind mature markets.
In fact, a significant proportion of e-commerce transactions in the region still end up as a cash transaction. In 2016, Middle East consumers made $900 billion in cash payments. This is expected to rise to $1.4 trillion by 2021, according to the PYMNTS Global Cash Index.
The evolution of payment methods provides interesting insights on the fundamental drivers of consumer choice when it comes to the payment journey. It comes down to experience, convenience, and security.
In 2017, Finablr's subsidiaries, UAE Exchange, Travelex and Xpress Money, recorded $100bn in transactions - $30bn in remittances and $70bn in forex transactions. It also handled more than 150 million customer transactions annually.
While the technology for a cashless society is available today, whether notes and coins go the same way as videos, cassettes and photo film to become a defunct relic of the past seems highly unlikely.
Cash remains by far the most common payment method across the world today and, while there will be less physical money in the world economy in future, even this is likely to deviate significantly across countries and cultures. Overall, financial institutions that accept and embrace a hybrid payment ecosystem can deliver the flexibility necessary to provide consumers with convenient payment choices.
Promoth Manghat is the chief executive of the financial services firm Finablr
In numbers: PKK’s money network in Europe
Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
Denmark: PKK one of two terrorist groups along with Iranian separatists ASMLA to raise “two-digit million amounts”
Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
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Mercer, the investment consulting arm of US services company Marsh & McLennan, expects its wealth division to at least double its assets under management (AUM) in the Middle East as wealth in the region continues to grow despite economic headwinds, a company official said.
Mercer Wealth, which globally has $160 billion in AUM, plans to boost its AUM in the region to $2-$3bn in the next 2-3 years from the present $1bn, said Yasir AbuShaban, a Dubai-based principal with Mercer Wealth.
“Within the next two to three years, we are looking at reaching $2 to $3 billion as a conservative estimate and we do see an opportunity to do so,” said Mr AbuShaban.
Mercer does not directly make investments, but allocates clients’ money they have discretion to, to professional asset managers. They also provide advice to clients.
“We have buying power. We can negotiate on their (client’s) behalf with asset managers to provide them lower fees than they otherwise would have to get on their own,” he added.
Mercer Wealth’s clients include sovereign wealth funds, family offices, and insurance companies among others.
From its office in Dubai, Mercer also looks after Africa, India and Turkey, where they also see opportunity for growth.
Wealth creation in Middle East and Africa (MEA) grew 8.5 per cent to $8.1 trillion last year from $7.5tn in 2015, higher than last year’s global average of 6 per cent and the second-highest growth in a region after Asia-Pacific which grew 9.9 per cent, according to consultancy Boston Consulting Group (BCG). In the region, where wealth grew just 1.9 per cent in 2015 compared with 2014, a pickup in oil prices has helped in wealth generation.
BCG is forecasting MEA wealth will rise to $12tn by 2021, growing at an annual average of 8 per cent.
Drivers of wealth generation in the region will be split evenly between new wealth creation and growth of performance of existing assets, according to BCG.
Another general trend in the region is clients’ looking for a comprehensive approach to investing, according to Mr AbuShaban.
“Institutional investors or some of the families are seeing a slowdown in the available capital they have to invest and in that sense they are looking at optimizing the way they manage their portfolios and making sure they are not investing haphazardly and different parts of their investment are working together,” said Mr AbuShaban.
Some clients also have a higher appetite for risk, given the low interest-rate environment that does not provide enough yield for some institutional investors. These clients are keen to invest in illiquid assets, such as private equity and infrastructure.
“What we have seen is a desire for higher returns in what has been a low-return environment specifically in various fixed income or bonds,” he said.
“In this environment, we have seen a de facto increase in the risk that clients are taking in things like illiquid investments, private equity investments, infrastructure and private debt, those kind of investments were higher illiquidity results in incrementally higher returns.”
The Abu Dhabi Investment Authority, one of the largest sovereign wealth funds, said in its 2016 report that has gradually increased its exposure in direct private equity and private credit transactions, mainly in Asian markets and especially in China and India. The authority’s private equity department focused on structured equities owing to “their defensive characteristics.”
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At a glance
Global events: Much of the UK’s economic woes were blamed on “increased global uncertainty”, which can be interpreted as the economic impact of the Ukraine war and the uncertainty over Donald Trump’s tariffs.
Growth forecasts: Cut for 2025 from 2 per cent to 1 per cent. The OBR watchdog also estimated inflation will average 3.2 per cent this year
Welfare: Universal credit health element cut by 50 per cent and frozen for new claimants, building on cuts to the disability and incapacity bill set out earlier this month
Spending cuts: Overall day-to day-spending across government cut by £6.1bn in 2029-30
Tax evasion: Steps to crack down on tax evasion to raise “£6.5bn per year” for the public purse
Defence: New high-tech weaponry, upgrading HM Naval Base in Portsmouth
Housing: Housebuilding to reach its highest in 40 years, with planning reforms helping generate an extra £3.4bn for public finances
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1. Black holes are objects whose gravity is so strong not even light can escape their pull
2. They can be created when massive stars collapse under their own weight
3. Large black holes can also be formed when smaller ones collide and merge
4. The biggest black holes lurk at the centre of many galaxies, including our own
5. Astronomers believe that when the universe was very young, black holes affected how galaxies formed
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The White Lotus: Season three
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VEZEETA PROFILE
Date started: 2012
Founder: Amir Barsoum
Based: Dubai, UAE
Sector: HealthTech / MedTech
Size: 300 employees
Funding: $22.6 million (as of September 2018)
Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC
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- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
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- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
