Emerging and developing markets, such as India, for example, are warming up to the idea of using decentralized payment solutions such as Bitcoin and other digital currencies. Looking at this from a financial point of view, India, together with China, are two countries working very hard to drive the growth of non-cash payments. Only time will tell if this move will help foster Bitcoin adoption in both countries.
Non-Cash Payments Are The Next Big Thing
In the Western world, people have been using cash payments less and less for nearly a decade. Ever since the introduction of credit cards and bank cards as mainstream payment methods, carrying cash in a wallet has become all but obsolete. That being said, not every retailer or shop accepts non-cash payments, for example, butchers and bakers usually still rely on paper money as a form of payment.
Countries like China and India have started to introduce electronic payments as well, despite the latter country being an underbanked region of the world. Mobile payments are making a huge impact on both India and China, as well, attributing to the global trend of increasing numbers of cashless transactions.
According to early projections, cashless transactions around the world will increase by nearly 9 percent, and reach a total of nearly 390 billion transactions. Not all countries around the world are growing in equal measures, mind you, as the largest growth is coming from the Asian continent.
With a growth rate of 27% annually, cashless transactions are quickly becoming the new norm in countries like China and India. This percentage can partially be attributed to the increase in Internet usage – and e-commerce – and the rise of mobile payments. After all, it is much easier for retailers to accept mobile payments, as there is no paper money involved.
The trend of non-cash payments is nothing new in China, as the country posted surprisingly high growth numbers of 37.7% in 2013. The year 2013 was quite important for China, as it took until then to see a nation-wide roll-out of point of sale terminals, combined with the opening of the domestic payments card markets to overseas competition.
Mobile payments have seen a spectacular growth in China, as well. Just last year, in 2014, the mobile payments volume in China increased by as much as 170%, ranking the country fourth on the global league table. As you would come to expect, the United States, Eurozone and – surprisingly – Brazil noted even bigger mobile payment volumes in 2014.
Digital Currencies Are Growing In Popularity As Well
Cashless and mobile payments are not the only noteworthy trends to be noted across Asian markets these days. Nearly 10% of all non-cash transactions are labelled as “hidden payments”, all of which take place outside of the banking system. Closed loop cards and mobile apps, digital wallets, and more importantly, digital currencies, pose regulatory concerns.
Money laundering remains a key focal point for financial regulators all over the world, and the rise of these “hidden payments” is a cause for concern. However, digital currencies, such as Bitcoin, don’t lend themselves towards money laundering at all, as this is the most transparent financial ecosystem in history.
Regardless of the rise of hidden and non-cash payments, banks remain in firm control of the financial ecosystem. Especially where electronic payments are concerned, as most of these solutions still rely on the traditional banking system. Linking credit cards or bank accounts to electronic payment solutions doesn’t allow users to cut ties with the traditional banking sector, whereas digital currencies such as Bitcoin do.
Source: World Payments Report 2015
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