Countries like India and China lead the charge as cash transactions plummet.
Cash is rapidly disappearing from consumer transactions across Asia, replaced by QR codes and other smartphone-based technologies. Physical money is forecast to make up just 14% of total transactions by 2027, down from around 47% in 2019, according to Worldpay, a U.S.-based payment processing company. The shift to cashless payments is driven not only by technological advancements but also by government efforts to promote domestic digital settlement systems and reduce reliance on Western credit card brands.
India is experiencing a notable transformation with its push toward cashless transactions. Cities like Mumbai are witnessing the rise of cashless payments, with services such as food delivery being conducted seamlessly through smartphones. Many of these services have stopped accepting cash, which reflects the growing dominance of digital payments. By 2027, cash settlements by value are expected to plummet to 10%, compared to 71% back in 2019. The catalyst for this shift can be traced back to 2016 when India launched its Unified Payments Interface (UPI), enabling real-time digital payments and underpinning various app-based delivery services and businesses. According to PwC India, over 131 billion transactions were executed through UPI only during the fiscal year 2023, demonstrating how widely adopted this system has become.
Meanwhile, China’s dominance in digital payments paints even more dramatic statistics. With over 1 billion users of platforms like Alipay and WeChat Pay, the transition away from cash transactions is marked by projections estimating it will drop to just 3% by 2027. Douglas Feagin, president of Ant International, which operates Alipay outside China, stated the company aims to widen its merchant network across Asia and beyond. Currently, over 10 million shops globally accept Alipay, indicating its extensive reach.
The accelerating trend toward cashless payments isn’t restricted to India and China; it’s gaining momentum across numerous Asian nations. The average share of cash transactions across 14 countries and regions is forecasted to decline from 47% in 2019 to 14% by 2027—slightly above Europe’s anticipated 12%. The French consultancy Capgemini predicts the Asia-Pacific region could witness 1.46 trillion cashless transactions annually by 2028, significantly overshadowing North America’s transaction volume.
Driving this rapid expansion of cashless payments is the growing adoption of smartphones. While Southeast Asia initially lagged due to low bank account and credit card penetration, the introduction of smartphones, which demand only minimal user requirements, has facilitated seamless transactions and empowered millions to engage with digital payments.
There is also a notable shift when it pertains to the payments ecosystem, as governments intensify their efforts toward promoting indigenous payment networks to reduce reliance on international brands like Visa and MasterCard. Alongside this, regional cooperation is taking shape to support cross-border digital payment solutions. For example, collaboration between Thailand’s PromptPay and Singapore’s PayNow now enables users to transfer funds effortlessly between the two countries. Experts envision the creation of an ‘Asian settlement bloc’ independent of foreign payment networks, which demonstrates the inclination for self-reliance among these nations. Akira Yamagami, of the NTT Data Institute of Management Consulting, remarked, “Southeast Asian nations are working to establish this bloc by creating systems to lessen dependence on foreign payment networks.”
Nonetheless, challenges persist. Ensuring the long-term sustainability of these local systems rests on maintaining user-friendly fee structures, which needs to balance competing interests: those of consumers and retailers alike. Achieving this balance is key as Asia embarks on its path toward increasingly cashless transactions.
Asia’s shift toward digital payments is setting global precedents, showcasing how technology, policy, and consumer behaviors intersect to reshape financial ecosystems. With initiatives like India’s UPI and China’s Alipay leading the charge, and regional collaborations flourishing, the continent is making significant strides toward embedding cashless transactions as the norm.
source : https://evrimagaci.org/tpg/asia-rapidly-transitions-to-cashless-payments-179251#google_vignette