Most of us, as full-fledged members of a technology-based society, take electronic payments for granted. When was the last time you used cash for all of your purchases in a single day? When was the last time you actually “cashed” a check instead of depositing it? Heck, a large percentage of the U.S. uses direct deposit, so even visiting the bank to deposit funds is unnecessary. There are even banks that exist online only, with few physical locations, because modern technological capabilities allow for virtual deposits and expenditures. Frankly, it’s kind of amazing.
So, is it any wonder that electronic payments have become vital to the U.S. economy?
Obviously, swiping a card to make purchases is incredibly convenient, so Americans—with our dependence on convenience and instant gratification—have taken to credit and debit cards with gusto. Add in direct deposit and mobile depositing applications, and you’ve got a wired world of convenient money access.
To support this, an entire industry has evolved around electronic payments: payment networks, merchant service providers, terminal hardware providers, financial institutions (banks), and other tech moguls such as Apple and Amazon that have created their own secure virtual pay options.
The popularity and variety in this industry has driven electronic payments to huge success. At this point, 70 percent of consumer purchases are made electronically. Since consumer expenditures make up 70 percent of the U.S. Gross Domestic Product (GDP), you can imagine electronic payments have moved beyond the realm of nicely convenient into very necessary to the U.S. economy.
Consider the following numbers:
- Global non-cash payments grew by 9.4 percent in 2013 (with developing countries leading at 22 percent growth).
- In 2013, global mobile payment (from a cell phone or other mobile device) volume reached $235.4 billion.
- In the U.S. alone, electronic spending is projected to reach $7.3 trillion by 2017.
Another factor that is fueling the growth of the electronic payment industry, beyond convenience and popularity with customers, is that it fits with recent efforts to “Go Green” on a global scale. Elimination of paper usage and waste creation has become a major priority in order to help the environment recover from the excessive waste created by early industrialization efforts.
The use of plastic cards that are replaced only every 3-5 years has reduced the need for checks and money orders, and many card users also elect to receive statements electronically, further eliminating waste.
This movement also benefits businesses, since paper costs money. According to some projections, going completely cashless could amount to a savings of roughly 1 percent of annual GDP. For the U.S., that would amount to $168 billion—a substantial chunk of change that U.S. businesses could reinvest into the economy.
While it’s unlikely that cash will be eliminated completely any time soon, we can clearly expect even more innovations in the world of electronic payments over the next few years. Considering all of the amazing creations of the last decade, many of which have related directly to facilitating mobile or card-based payments, both businesses and consumers have a lot to look forward to.
Checkout this awesome infographic by The Strawhecker Group on this very subject.
About the Author – Ashley Choate is a native of Jacksonville, FL where she lives with her son, dog, and three cats. She graduated Magna Cum Laude from Jacksonville University with a BA in English and holds an MAED in Adult Education and Training. She lives for reading and writing, learning and teaching, and figuring out the day-to-day traumas and joys of mommyhood.