The future of cash: will it eventually disappear? (2024)

Electronic transactions are increasing considerably over time, raising the question whether cash will eventually cease to exist. Although it is difficult to predict the future with certainty, some trends show a progressive reduction in the use of cash.

Increasing innovations in means of payments and the acceleration of digital adoption brought about by the pandemic are the main reasons why cash use is declining significantly.

According to the Payments Observatory 2023 report, in 2021 cash accounted for 17.9% of transaction value at traditional merchants, however, by 2025 the figure is expected to drop to just 9.8%. Thus, following this trend, cash could become obsolete in a projection of approximately 10 years.

On the other hand, it is possible that cash will play an important role in the development of social dynamics, as some people may begin to adopt its use because of its anonymity, since cash does not allow traceability of transactions.

Either way, as financial technology continues to develop, cash will continue to lose ground in large proportions. Since transactions made through mobile payments, cryptocurrencies and smart cards are increasing considerably, mainly because they offer benefits such as convenience, security and speed.

Additionally, central banks around the world are exploring the possibility of creating government-backed digital currencies that could replace cash in the future. Instead of people having cash in their wallet, they could have a digital wallet containing government-backed digital currencies. This could improve efficiency and financial inclusion, but also raise concerns about privacy and security. This government-backed digital money is referred to as CBDC.

While it is undeniable that the use of cash will decrease over time, it is unlikely to disappear completely. Importantly, the digitization of transactions and the elimination of cash has many challenges ahead. The main one is financial inclusion in marginalized rural areas where it is difficult for people to access technological means or financial products, so cash is the only means of payment available. On the other hand, there is the issue of privacy and the correct handling of data, since digital transactions can violate personal information and facilitate the exposure of data.