The use of cash is currently declining in most first world countries, including the United States. Within a decade, from the years 2015 to 2025, it is projected that there will be a 25% decrease in people that use cash on a weekly basis. Perpetuating this change is the fact that there have been some major shifts in the way that we conduct our shopping. Since the onset of the COVID-19 pandemic, a lot of our shopping habits have moved online to websites such as Amazon. This is more manageable for both buyers and sellers, as there is no longer any physical interaction that needs to take place to procure goods. However, these transactions are only made possible through the invention of digital currency.
Types of Digital Payments
People are trading out cash for the more convenient and accessible digital versions that have been made possible with some very significant technological strides in recent years. Paving the way for this adoption are digital wallets, which allow users to complete transactions using their smartphones, rather than pulling out cash or cards. Apps such as Venmo, PayPal, and CashApp are also extremely popular digital wallets that are used by 49% of all cashless transactions. PayPal has even had use within the gambling industry to help casinos distribute winnings to their patrons. Digital wallets are only expected to grow in prominence; it is expected that 53% of all eCommerce transactions will be completed using a digital wallet by 2025.
Cryptocurrency has a lot less traction than digital wallets, but is also contributing to the fall of cash in recent years. Cryptocurrency relies upon blockchain technology to ensure a smart contract, meaning that all payments are autonomous and irreversible when sent from one account to another. Some of the most popular cryptocurrency coins are Bitcoin and Ethereum, which are already being accepted as currency by some merchants. Other crypto technology includes crypto tokens and non-fungible tokens (NFTs). There are already 3.3 million American adults that pay using cryptocurrency, which contributes to the larger global crypto total transaction value of $9.3 billion.
All global regions have experienced this trend of rapidly increasing cashless transactions. The Asian-Pacific region is leading the world with virtual payments so far. Its market stood at $611 billion in payment revenue in 2020, but is projected to reach $932 billion by 2025. This represents a 42% increase in payment revenue, which is higher than any other region. The Latin American region is also experiencing rapid growth, at a 40% increase, but the volume of its payments is a lot lower. North American and Europe will also experience growth in virtual payments, but the Middle East trails the rest of the regions in both volume and growth.
Although all of these world regions are experiencing varying levels of reception to this new technology, it is not unbelievable to expect that cash will have a much lower level of usage in the next few decades, if not disappearing altogether. Some countries are already developing digitized versions of their fiat currencies called central bank digital currencies. The future of digital payments is bright for virtual payment technology, and it will inflict some massive changes in the way our world operates.