Use and Substitution of Cash and Electronic Payments in Asia

The substitution of electronic payments for paper-based non-cash transactions and the share of cash in the value of consumption are investigated for Hong Kong, Japan, Korea, Singapore, Taiwan, and Thailand over 1995-2003. Five and ten-year logistic curve projections for electronic and cash payment shares are presented. While electronic payments are generally cheaper than paper-based non-cash payments, saving resources, this may not extend to cash, particulars at the retail rather than the bank level. Before offering incentives for consumers to reduce cash use, estimate of social cost savings and the effect on government seigniorage revenues need to be made.