Cashless Payments: Redefining Global Economic Opportunity & Promoting Sustainable Development Goals
The rise of cashless payments and an increasing shift to digital payments are creating opportunities around the globe for more equitable and sustainable development. Indeed, cashless payment methods are playing a crucial role in promoting greater income potential for millions of workers and entrepreneurs worldwide by simplifying and opening access to capital.
This shift to cashless payment solutions can significantly promote a range of sustainable development goals set forth by the United Nations in its recent Sustainable Goals Report.1 Of the 17 milestones that it calls on nations to reach by 2030, financial inclusion plays a role in at least five—including reducing poverty and inequality, supporting sustained and inclusive economic growth and providing economic empowerment opportunities for women.
For people who haven’t been able to establish a financial history or easily transfer money, cashless services can be life-changing. Access to financing, mobile payments services and savings accounts can help improve people’s financial circumstances by allowing them to manage money more efficiently and sustainably.
Cashless services also allow people to create records of financial activity, which can be used for access to financial services and loans. As their financial circumstances expand, so too does their economic power. They can purchase more goods and services and start businesses. Accepting cashless payments also opens existing businesses to new growth opportunities.
Today, it’s clear that digital platforms, including cashless payment solutions, can serve as a democratizing force in financial sustainability and development. Here are four leading ways that cashless payments are redefining global economic opportunity.
1. Connecting low-income and vulnerable groups to banking products
Low-income groups often find themselves the victims of predatory business practices. Criminals frequently target this segment as they see this often underbanked (or unbanked) population as an easy mark for salary scams or predatory lending.
In some countries, a worker who is paid in cash, for example, has little recourse if an employer cheats them, lacking a formal record of their income. In addition to being cheated, this system may make it difficult for the worker to apply for additional lines of credit or financing beyond their daily or monthly income.
Digital bill pay and savings options can help people ensure they’re paid fairly—as well as establish financial records they can use to apply for credit, open savings and investment accounts, and purchase wealth-building and stable assets.
2. Helping entrepreneurs access financial services
Small-business entrepreneurs who want to open shops often have a difficult time if they are challenged by low income or limited credit, as traditional lenders may be wary of working with them.
But mobile-based microfinance and credit platforms can help these entrepreneurs obtain capital and earn better, more consistent income for their families. Services that include complementary training and support, alongside credit lending, can assist people in creating profitable and sustainable businesses.
For small-business owners, access to financial services and education are crucial to jump-start economic sustainability and growth. When people gain control over their money and earning power, they become more resilient to financial shocks like the economic downturn recently caused by the pandemic.
3. Bringing merchants new opportunities
For merchants, sustainable growth also depends on their ability to accept cashless payments from customers. This is especially true today, when contactless payments—including payment cards and digital wallets like Apple Pay, Google Pay, and Samsung Pay—are more popular than ever.
Contactless transactions have increased sharply in recent years. Discover® Global Network contactless sales volume increased 109%+ YOY from 2021 to 2022 globally.2 Meanwhile, a global consumer survey showed that, when given the choice, 51% of consumers prefer to make in-person payments using a contactless method of payment, such as tapping their card or smartphone.3 In the same survey, 62% of consumers said a contactless payment experience was either very important or critical when deciding to use a digital payment service.
The good news is upgrading to contactless technology is often easier than expected. If EMV®-compliant smart card payment solutions like Discover D-PAS are installed, contactless functionality needs only to be activated. In partnership with the card networks, software providers or other payments facilitators can help with the process.
Tap on Mobile functionality, which lets merchants accept payments with any certified smartphone or tablet, is another cost-effective option. It’s a completely software-based solution that uses the NFC chip already built into most mobile devices. No additional hardware needs to be purchased or managed. Instead, merchants can quickly add card acceptance to a device they likely already have. Customer simply open their digital wallet on their mobile device and touch the merchant’s device to complete the transaction. Tap on Mobile usage is steadily growing around the globe and may be particularly useful in developing nations.
4. Providing benefits to consumers everywhere
Cashless payments aren’t important just for traditionally disadvantaged populations. Digital payment services can give consumers and businesses at all economic levels faster, more convenient and more seamless ways to manage their finances, pay for goods and services, and save money.4 Accelerated growth in digital wallet usage, now the leading payment method globally for both e-commerce and point-of-sale transactions, has prompted much of the transition to cashless methods.5
While China has been the global leader in digital wallet adoption, expanded use of digital wallets is also displacing cash throughout the world, including in places such as Saudi Arabia and Vietnam.5 But, in some countries, including India and Thailand, increased demand for account-to-account (A2A) real-time payments are primarily driving the decline of cash.5
A sustainable and more equitable future
Around the globe, real-time digital payments are more convenient—and more hygienic—than cash or checks. In particular, Sweden, Denmark and the Netherlands are among the top 10 real-time payments markets globally, according to one 2023 report.6 In total, cashless, connected services may transform quality of life by easing transactions and supporting a more integrated consumer experience. In addition, increased access to financial services opens doors to increasing savings, building financial histories and credit, accessing education and seizing new career and business opportunities.
When it comes to sustainable development, cashless payments may well be the thread that ties previously disconnected innovations together.
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- United Nations, 2023. “The Sustainable Development Goals Report 2023: Special edition.” Viewed 4 October 2023.
- DFS Internal Reporting
- 451 Research, part of S&P Global Market Intelligence. 2022 Global Consumer Fintech Survey: Key Findings. Custom survey commissioned by Discover, July 2022.
- 451 Research, part of S&P Global Market Intelligence. 2022 Global Consumer Fintech Survey: Key Findings. Custom survey commissioned by Discover, July 2022
- FIS Global. “The Global Payments Report.” Viewed 4 August 2023.
- ACI Worldwide, 2023. “Prime Time for Real-Time Global Payments Report.” Viewed 6 August 2023.
The information provided herein is sponsored by Discover® Global Network. It is intended for informational purposes, and is not intended as a substitute for professional advice.