Digital payments have the power to “do no less than rebalance global economic power” and will bring about the end of plastic cards, not cash.
Deutsche Bank’s latest The Future of Payments report challenges the view that the increase in digital payments signifies the end of cash.
“Our view is different,” it said, adding that its research suggests “cash will be around for a long time”.
After surveying 3600 customers across the US, UK, China, Germany, France and Italy, the report argues that in these uncertain economic times marred by trade wars, conflicts around the world and Brexit, both customers and wealthy investors are turning to cash for security.
Two-thirds of people surveyed said they had considered increasing holdings in cash and the report suggests a “deep-rooted trust in paper and coins during uncertain times” means cash will be around for decades to come.
Furthermore, a third of those surveyed in developed countries consider cash to be their favourite payment method and more than half believe cash will always be around, while 11 per cent of Americans plan to use cash more in the next six months.
Meanwhile the coming decade is expected to see digital payments “grow at light speed, leading to the extinction of the plastic card”.
Mobile payments are predicted to account for two-fifths of in-store purchases in the US over the next five years, quadruple the current level.
Looking to China for insight into the future of payments, the report suggests the country’s rapid adoption of both digital payments and digital currency could see “the epicentre of global economic power… shift”.
China is currently working on a state-backed digital currency, meaning companies that want to trade with China will have to adopt the digital-yuan.
This in turn could erode the dominance of the dollar in the global financial market, with the number of digital currency users expected to quadruple this decade to 200 million.