The hidden impact

Cash, card, crypto: how the way you pay will affect your life

The trend has been in place for quite some time but has gained considerable momentum recently: last year saw the largest ever number of digital payments. According to the FIS Global Payment Report, the volume of cash that changed hands declined by one third compared to 2019.

“The pandemic has accelerated the shift away from cash by more than three years,” say the FIS experts. This means that its forecast for 2023 was already surpassed last year.

Very few people had been expecting such a fast pace before the pandemic struck. In hindsight, however, it comes as no surprise. Firstly, many people now prefer to pay digitally rather than cash for hygiene reasons. And secondly, payment methods have always evolved: since time immemorial, humankind has shown itself to be inventive when it comes to the exchanging of goods, products and services. You can find an overview here.

How digital payments are changing our behaviour

New payment methods and processes are not only changing the world of commerce, but also the way that humans behave. And digital innovations are accelerating these changes.

This precise aspect is the focus of our dossier – and we look much further into the future. How are new payment options impacting our everyday lives? Do I act differently if I can pay quickly using a smartphone? Do I spend more when I pay digitally, or perhaps less? Do I perhaps have better control of my finances when everything is digital? Find out more in this video from our digital expert Lisa Zeller.
Our product manager Thorsten Woelfel explains what makes digital payments attractive to businesses. The obvious argument is that retailers reach more customers because nowadays consumers expect to be offered numerous different payment options. But retailers also obtain better sales statistics, enabling them to adjust their supply chains. Take a look at this video to hear exactly how that works as well as the surprising forecast Woelfel makes regarding the costs of digital payment methods.

Taking a look around the world, you find that the impact of digital payments is frequently ambivalent. Are they more likely to exclude people from commercial transactions or will they perhaps enable certain people to become economically active in the first place? Here it’s worth taking a closer look: in several regions of Africa it is digital payment methods for example that enable people to access financial services, fostering the objective of achieving financial inclusion. In several western countries, by contrast, some less digitally savvy people feel excluded. You can read how to reach these people in our article about viafintech a start-up whose products are aimed at these people.

Will digital payments bring about the end of user privacy?

Many people are concerned that by using digital payment methods they might relinquish the privacy of their personal data. And it is a fact that by making digital payments we generate data that reveals a lot about us. But what exactly? And what does it explicitly not reveal? Shivaji Dasgupta, Head of Data and Artificial Intelligence (AI) at Deutsche Bank, provides answers.

What’s coming next?

In closing, we ask what the future might bring: will we be able to use crypto-currencies to pay for things? On June 21, El Salvador became the first country in the world to introduce bitcoin as legal tender alongside the US dollar. President Nayib Bukele sees it as an opportunity to enable more Salvadorians to participate in economic activity. Other countries could follow this lead. But how realistic is it to expect crypto-currencies to establish themselves as a means of payment? And who will benefit from this? We discussed this with Marion Laboure our expert from Deutsche Bank Research.

Markus Dahlem

is fascinated by how inventive people have always been in developing new payment methods, and appreciates the convenience offered by today's digital options – especially when traveling.

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