The Future of Money: Three Ways to Go Cashless

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Summary:

  • Global trend towards cashless society is accelerating.
  • US experiences surge in card payments during pandemic.
  • India's UPI fosters financial inclusion and data-driven services.
  • China's AliPay and WeChat Pay dominate digital payments market.
  • Distinct models of digital payments shape financial landscapes worldwide.


Around the world, the trend towards a cashless society is accelerating. Economists' correspondents share insights on digital payment systems in key markets.


The Rise of Card Payments in the US

During the pandemic, digital payments gained momentum globally. In the US, the use of cards for payments increased significantly, with merchants accepting cards due to their widespread use and the underlying profitable model.

The major card issuers, Visa and Mastercard, charge substantial fees to merchants, enabling them to offer rewards to consumers and robust consumer protection. This model's resilience and popularity among consumers make it challenging to disrupt.

India's Unique Payment Model

India's Unified Payment Interface (UPI) is reshaping the country's financial landscape. UPI, owned partly by the central bank, facilitates interoperable transactions between various banks and FinTech wallets, enabling digital payments even for those without credit history.

This transformation goes beyond payments, affecting creditworthiness, insurance, and loans. The account aggregator system allows individuals to export and import data for seamless financial services.

China's Dominance of Mobile Payments

In China, platforms like AliPay and WeChat Pay dominate digital payments, controlling around 90% of the market. QR code systems revolutionized payments, making them more accessible by eliminating the need for expensive card readers. These platforms expanded into lending and other services, prompting government interventions due to their significant financial influence.

Unlike the open system of UPI, China's model operates through closed networks, built on existing platforms with strong network effects.


As the world embraces digital payments, each region follows a distinct path. The US relies on card networks, India champions an interoperable UPI, and China's platforms hold financial sway.

With financial systems evolving, the future promises more integration and innovation, reshaping how societies interact with money.

Location: London, UK

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