In the long-running tussle between cash payments and digital payments, a decisive victor is becoming clear. Go up to any register in 2018, and the store clerk will expect the payment to be made digitally, reaching straight for the reader as soon the products are scanned - cash will even sometimes be met with surprise. Contactless payments and mobile payments have given digital the boost it needed to become dominant.
In 2006, 62% of all payments made in the UK, for example, were made using cash, according to the Guardian. This figure falls to just 40% when you fast forward to 2016. Another 10 years on, in 2026, it is predicted that notes and coins will make up just 21% of all sales. Even the PIN is on the wane - ATM usage peaked in 2012 but has been on a constant and considerable decline since, since it became genuinely more convenient to tap than carry bank notes. And, some are even predicting a drop in card usage, as mobile payments become more convenient and more normalized, and as smartphone adoption continues to skyrocket.
Perhaps unsurprisingly, China has emerged as a world leader in mobile payment technology. Meeker's report found that, in 2017, China had 500 million active mobile payment users, more than the population of the US and the UK combined. "China is recognized as the most advanced market for mobile payments in the world, thanks to WeChat and Alipay,” Paul Haswell, a senior partner at international law firm Pinsent Masons, told South China Morning Post. “Essentially, use of credit and debit cards in China is relatively cumbersome compared to making WeChat payments. As such, many Chinese cities are now the closest we have to cashless consumer economies.”
The reason for China's dominance is partly a cultural willingness to embrace technological advancement, partly a population so huge that user figures will always seem large, and partly thanks to the innovative work of its major tech players. Alibaba and WeChat, in particular, are driving mobile payments forward in China by building incredibly usable products.
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As of August 2017, Apple Pay and Samsung Pay had 87 million and 34 million users respectively. To put the Chinese market into perspective, WeChat pay and Alipay - both used predominantly in China - had a huge 600 million and 400 million users respectively. It's an incredible platform from which the country can completely normalize and adopt mobile payments as a standard going forward. Helpfully for WeChat pay and Alipay, neither is tied to a particular device, as both Apple Pay and Samsung Pay are, so their potential for mass adoption is immediately far higher.
China's growth is prompting companies like Google to attempt to track a course back into its market. During Google's absence in the country, China has become the world's largest market for smartphone users, bringing in the highest app revenue and the most app downloads per year globally. For Google to reintroduce either of its key products to China - the Play Store and its Chinese search business - it would need to comply with the government's demands, which it was previously unwilling to do. Bring the current political situation into the mix and Google's re-entry into China is unlikely to be smooth. The competition in the world's most populated country is also fierce, with incumbents far more established in the region than Google could ever hope to be in the near future. Its desire to give it a try, though, reflects China's growing dominance in the world of mobile.
It will be a very long time before cash becomes a rarity, but the move towards digital payments is so steady as to seem almost inevitable. If a country as influential as China can pave the way and encourage big business to want a piece of the action, it will foster growth elsewhere. Smartphone adoption in emerging markets is growing quickly, too, and the sky is the limit for mobile payments.