Every time you pay for dinner by tapping your cellphone on a sensor, receive money for that freelance gig, or access government transfers by phone, you are participating in the rapidly accelerating move away from cash.

While the global fintech industry is evolving to expand access to the financial sector and make payments between individuals and businesses more fluid, the move away from cash means different things in different places. In wealthy states, the adoption of credit and debit cards is rife, while emerging markets tend to rely on digital wallets and cash apps that often don’t require a bank account.

COVID as a watershed. The pandemic was a boon for the digital payment industry as many businesses in developed economies increasingly turned down cash. For some countries, it hastened the transition to a virtual economy, while for others it has meant becoming less reliant on cash flows.

Consider that in Scandinavia, for instance, cash has been uncool for some time – a trend reinforced by the pandemic. Indeed, cash transactions accounted for just 1% of Sweden's GDP in 2018, and cash withdrawals have been declining by about 10% per year. Similarly, 85% of Danes used MobilePay, launched by Danske Bank in 2013, before the pandemic — and that number continues to rise.

In Africa, meanwhile, Kenya has emerged as a fintech leader after the country’s largest mobile network, Safaricom, launched a branchless banking system in 2019 that has caught on like wildfire. As of last year, at least 12 billion transactions had been made across the continent using the system, benefiting many small business owners and reducing poverty. (Since the program started, around 2% of Kenyan households have been lifted from extreme poverty due to increased access to fintech services.)

However, some societies simply love cash. Cash culture is rife in Japan, where despite being a hub for tech innovation, digital payment systems have been spurned by much of the population. More than 90% of those surveyed in Japan say cash is their primary payment method, according to Statista, with many citing security and privacy concerns as the reason for their preference. Moreover, some 38% of respondents said non-cash options “made them less aware of the amount of money they are spending.”

Critics say that there are also proven downsides to digital payment systems, including increased risk of cybercrime and inequality. Indeed, some research suggests that consumers who had mostly been paying in cash before COVID — having limited access to fintech solutions — are returning to cash again now.

Meanwhile, many business owners and corporations that rely on digital payments benefited from stay-at-home orders and raked it in. In the US, for example, Amazon and Walmart together earned an additional $10.7 billion in 2020 — a 56% increase in profits from the previous year. But their employees’ wages grew by just 7% and 6% respectively.

In emerging markets, where roughly 2.5 billion adults were unable to make or receive digital payments, the pandemic was disastrous, exacerbating rich-poor divides.

Cashing out can also lead to crises. Indeed, many Indians learned this the hard way before COVID in 2016, when Prime Minister Narendra Modi invalidated the 1,000 and 500 rupee notes, which at the time represented 86% of India's currency. The move, intended to root out the underground economy, was catastrophic for India’s large gig economy and unbanked working poor.

It’s for this reason that many states and cities in the US have banned stores from refusing cash payments, saying this would disadvantage low-income consumers.

Bottom line. We are heading towards a future where cash will surely be used less and less. Still, as long as wealth inequality exists, cash will remain a key part of the global economy.

The world is not going cashless — but it certainly is using a lot less physical money than before. Non-cash transactions exploded during the pandemic, when people around the world first started buying everything online and then became accustomed to having less cash on them to do business in brick-and-mortar establishments. But the so-called "less cash" revolution is not playing out equally across the globe: while rich nations mostly use contactless cards, mobile payments are king in Africa. Meanwhile, QR codes are the way to go in Asia-Pacific, which is leading the surge in the global adoption of cashless payments. We take a look at how different regions have performed since 2019 and look ahead to next year.

The advent of digital IDs

In poor countries, many are born without birth certificates or identification, a problem that leaves them unable to participate in modern society because they can’t prove who they are. Those without papers can’t open bank accounts, and governments can’t track transactions conducted entirely in cash, meaning they can’t tax people they can’t find. In turn, this lost revenue makes it harder for countries to provide much-needed public services. Before Aadhaar, a biometric ID system issued in India, more than one billion people in that country, and the government in Delhi, faced this very challenge. The Aadhaar system uses thumbprints and iris scans to establish identities and bring people onto the grid. It provides a unique 12-digit number to every user and allows authorities to transfer funds for state pensions, fuel subsidies, and other government help directly into bank accounts created for people who’ve never had access to such things. In important ways, this system is a triumph in human development, but there is a potential downside: In a country where rule of law isn’t firmly entrenched, if a government can put money directly into your bank account, it can also withdraw it. That power could one day become a tool of coercion that political leaders in countries that use similar ID systems can use to enforce obedience from millions of people. There is also the risk of hacking and identity theft, a problem that can only be managed gradually as problems emerge. These are risks we’ll see in many developing countries in the coming years.

Digital transfers to the rescue!

When pandemic lockdowns forced millions out of work, the government in the small West African nation of Togo faced a challenge of how to get emergency cash transfers to people quickly and safely. Having people wait for hours in crowded government offices wasn’t just inefficient; it was a public health risk. Within 10 days, the Togolese government set up NOVISSI, a digital cash transfer system accessed via mobile phone. Using machine learning to identify the most vulnerable individuals, the program quickly covered a quarter of Togo’s adult population. Across the globe in Chile, meanwhile, the Cuenta RUT digital transfer program got pandemic relief funds directly and securely to 2 million of the country’s poorest citizens. In emerging markets, there are now more than 150 digital cash transfer programs in use. They get cash into needy hands fast while also introducing people to digital financial services more broadly. But technology alone isn’t always enough: After a recent pilot digital cash transfer program for disaster relief in Bangladesh, for example, only a tiny percentage of recipients kept using the tools. Work must still be done to overcome issues of trust, confusing interfaces, and — in the case of women — cultural norms that have limited their access to the platforms altogether.

A crypto cautionary tale

Just over a year ago, the small Central American nation of El Salvador became the first country in the world to adopt a cryptocurrency — in this case, bitcoin — as national tender alongside the US dollar. The government of Nayib Bukele, a millennial populist with an authoritarian streak, spent millions to boost the idea. Bitcoin, he believed, would broaden financial inclusion in a country where only around one-third of the people have a bank account, bolster El Salvador’s financial independence, and streamline remittances, which make up a quarter of GDP. Things started well enough: The state created digital wallets for the population and gave everyone $30 of bitcoin as a bonus. There were even plans for a Bitcoin City financed entirely by coin-backed bonds. But so far the strategy has been more dip than boom. The currency has lost 60% of its value since its adoption, no small matter in a debt-wracked country that needs help from the IMF. And among the public, Bit never quite hit: Only 20% of Salvadorans used bitcoin after spending the initial $30 knot, and just one in five businesses accepts the currency. What's more, less than 2% of remittances last year arrived as bitcoin. The biggest challenges so far have been a lack of trust in cryptocurrencies and insufficient access to cell phones (only 2 out of 3 Salvadorans have one), which have hobbled the project.

Like much of the world, Nepal saw digital payments soar during the pandemic. Tulsi Rauniyar, a young documentary photographer, experienced the transition firsthand. With COVID making human touch a big concern, e-commerce and cashless transactions have become more commonplace — so much so that Rauniyar herself rarely uses cash anymore. This tech solution is increasingly helping female entrepreneurs and businesswomen succeed in Nepal. But it still needs to reach rural areas, where many hard-working women are unaware of these transformative technologies.

Watch the latest video in our Closing the Gap series here.

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41: That's the percentage of Americans who say they don't use cash for any purchases in a given week, according to a new Pew Research Center survey. Only 14% still pay for the bulk of their purchases with physical money, most of them likely low-income and unbanked.

70: Mobile payments might soon overtake card transactions in sub-Saharan Africa. The region dominates the global mobile money market, accounting for 70% of $1 trillion worth of transactions recorded last year.

90: Indians hate the often hefty "convenience fees" they pay for cashless transactions, even for government-related services. But 90% say they’d rather get charged a bit extra to avoid going to a physical counter.