Rapid decline of cash in Asia: A shift toward digital payments
Cash is rapidly disappearing from consumer transactions across Asia, as QR codes and smartphone-based technologies take center stage. According to Worldpay, a US-based payment processing company, physical money is projected to account for just 14% of total transactions by 2027, down significantly from 47% in 2019. This shift is driven not only by technological advancements but also by government efforts to promote domestic digital settlement systems and reduce reliance on Western credit card brands.
India's leap toward cashless transactions
In cities like Mumbai, the rise of cashless payments has transformed everyday life. Motorcycle couriers now deliver food and daily necessities within minutes, with transactions completed entirely via smartphones. Many of these services no longer accept cash, reflecting the growing dominance of digital payments. By 2027, the share of cash settlements by value is expected to plummet to 10%, compared to 71% in 2019.
India's push toward cashless transactions began in earnest in 2016 with the introduction of the Unified Payments Interface (UPI), a mobile payment system developed by the Indian government in collaboration with financial institutions. UPI enables real-time payments and underpins app-based delivery services and other businesses. In fiscal year 2023, PwC India reported that over 131 billion transactions were conducted through UPI, underscoring its widespread adoption.
China's dominance in digital payments
In mainland China, where over 1 billion people already use platforms like Alipay and WeChat Pay, the transition away from cash is even more pronounced. By 2027, the share of cash transactions is expected to drop to just 3%, highlighting the overwhelming preference for digital solutions.
Douglas Feagin, president of Ant International, which operates Alipay outside China, emphasized the company's ambitions to expand its merchant network across Asia and beyond. Currently, more than 10 million overseas shops accept Alipay, demonstrating the platform's global reach.
Regional trends and projections
The trend toward cashless payments is accelerating across Asia. The average share of cash transactions across 14 countries and regions is forecast to decline by 33 percentage points, falling from 47% in 2019 to 14% in 2027—just slightly above Europe's projected 12%. French consultancy Capgemini predicts that the Asia-Pacific region will see 1.46 trillion cashless transactions annually by 2028, surpassing North America's volume by more than four times.
Smartphone adoption fuels growth
The growing use of smartphones is a key driver behind the rapid expansion of cashless payments in Asia. While Southeast Asia lagged behind in adopting cashless methods due to low bank account penetration and limited credit card usage, smartphones have bridged this gap. With minimal requirements—a phone number and basic personal details—transactions have become seamless, enabling millions to embrace digital payments.
Worldwide, the share of smartphone-based payments at storefronts is expected to reach 46% by 2027, more than double the 22% share of credit card payments. This shift highlights the transformative impact of mobile technology on consumer behaviour.
Nationalism and self-reliance in payment systems
Nationalism plays a significant role in shaping Asia's cashless landscape. Governments in India and China are actively promoting indigenous payment networks to challenge international credit card brands like Visa and MasterCard, which impose transaction fees and collect vast amounts of user data. These domestic systems aim to provide affordable, secure, and efficient alternatives.
In Southeast Asia, regional cooperation is fostering cross-border digital payment solutions. For example, users of Thailand's PromptPay and Singapore's PayNow can now transfer funds between the two countries. Efforts are underway to develop a broader cross-border real-time settlement system for the region, with experts envisioning an "Asian settlement bloc" independent of foreign payment networks.
Akira Yamagami, a fellow at NTT Data Institute of Management Consulting in Tokyo, noted, "Southeast Asian nations are working to establish an 'Asian settlement bloc' by creating a system that reduces dependency on foreign payment networks."
Challenges ahead
While government-led initiatives have helped keep user fees low, ensuring the long-term sustainability of these systems remains a challenge. Operators must balance innovation with affordability, maintaining fee structures that satisfy both consumers and retailers. Striking this equilibrium will be crucial as Asia continues its journey toward a predominantly cashless future.
As Asia embraces digital payments, the region is setting a global precedent for how technology, policy, and consumer preferences can converge to reshape financial ecosystems. From India's UPI to China's Alipay and regional collaborations in Southeast Asia, the continent's move toward cashless transactions exemplifies a bold step into the digital age.
