So far we’ve looked at cash. As with any aspect of life, there is always competition. For cash competition comes in many forms such as checks, credit / debit cards, ACH transfers, etc. The use of payment instruments has undeniably changed over the past 20 years, and in chapter 6 we look at the growth of electronic instruments. Today checks are disappearing (and have virtually disappeared in some countries) and cards are used for a significant portion of purchases. Debit card transactions in G10 countries has a fitted ‘S-curve’, with a steepness parameter of a=0.28. Fitting a curve to debit card growth in BRIC countries yields a remarkably similar steepness parameter of a=0.29. Growth in BRIC countries appears to follow almost exactly the same path as it did in G-10 countries some 13 years earlier. However, cash is still king, at least in terms of the number of transactions (although since cash transactions tend to be relatively small, their share in the overall value is lower). In the Netherlands for example, per capita cash transactions are more than three times the number of debit card transactions. On the other hand, unless the pace of POS-debit adoption increases dramatically, it will take another 20 years before it surpasses cash as the dominant medium at the Point of Sale.
Download chapter 6, Cash or Card?, here.