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Money is the basis of the world economy and although its first appearance is unknown, until a few years ago money was the main means of payment.

Even when the first credit card appeared in Mexico in 1949, cash remained the most used means of payment in the country and in other parts of the world due to the attributes that people assign to cash, such as practicality, the sense of belonging, safety and trust.

According to the Bank of Mexico, 32% of the population in the country usually keep their cash somewhere other than a financial institution. However, the digital payment method has gained relevance in the last decade due to social, cultural and natural factors. The advancement of technology and natural catastrophes have been the watershed to change the classic payment schemes of society.

With the use of digital banking, the increase in electronic transfers and credit cards have decimated cash as a means of payment. Since 2010, some countries such as Sweden decided to adopt a no-cash policy, thus achieving a decrease in the use of cash as a means of payment, going from 40% use in the population in 2010 to less than 10% in 2020.

On the other hand, this paradigm shift in the means of payment has not been as easy to witness in other countries in which the digital divide and the rejection of the adaptation and use of new technologies have been great obstacles. This is why in recent years other factors have intervened that have driven change. In Mexico and in the world, the pandemic was a factor that brought with it the increase in the use of other means of payment.

Contradictory to the aforementioned, during the beginning of the pandemic there was an unusual demand for cash worldwide. In Mexico during 2019 and 2020 there was an increase in cash in circulation of between 7 and 9% of GDP. The foregoing, due to the global economic instability that arose in this period and the psychological security that having cash generates in society.

Subsequently, the opposite effect occurred due to the closure of a large part of the economic activity in the country. Cash ceased to be a completely useful means of payment, since in most cases it was not required to pay, since businesses began to use other means such as credit cards.

With this, the advance of the pandemic gave a substantial boost to the use of cards and electronic transfers. Even with the economic reopening and the established health prevention measures, these means have been the most used. According to a study presented by the MercadoPago platform, seven out of 10 vendors began to use point of sale terminals, which showed greater satisfaction for merchants, as they were able to see an increase in their sales compared to the use of cash.

The progress in the adoption of the electronic means of payment shown in the country in times of uncertainty shows that Mexico is capable of moving towards the reduction of cash as the preferred means of payment. And they could have self-service stores like in other countries where the use of cash is no longer necessary, it is enough to take the products and when leaving the place, a scanner makes the calculation and collection of the selected merchandise to the account of the buyer.

However, the elimination of cash and the preponderant use of other means of payment in the future are still uncertain since they will depend on various factors such as: the economic policies of each country, the reduction of the existing digital gap in the majority of adults elderly and the limited possibility of access to new technologies, people’s habits to continue adapting to changes in technology, advances in the security of information technologies to ensure that the infrastructure and platforms used have the appropriate measures to ensure its use and the advantages and disadvantages that are seen with the decrease in the use of cash in society.

* El autor es Senior Analyst Technology & Production.

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