the global cost of cash and the digital economy

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February 15, 2016 Global Cost of Cash and the Digital Economy: A Global Benchmarking Study

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Page 1: The Global Cost of Cash and the Digital Economy

February 15, 2016

Global Cost of Cash and the Digital Economy: A Global Benchmarking Study

Page 2: The Global Cost of Cash and the Digital Economy

SMALLEST COST OF CASH

Around the world, cash costs are higher for those who are “less banked”

Money deposited electronically

Travel to deposit cash/check

Travel to cash check

Time/Money to Travel to ATM

Check cashing + pay day loan fees

Check cashing + pay day loan fees

Pay digitally or with card

Pay digitally or with card

Pay digitally or with card

Risk theft

Risk theft

Travel to home or ATM when cash is needed

Travel to home or ATM when cash is needed

ATM fees

ATM fees*

MEDIUM COST OF CASH

LARGEST COST OF CASH

*In some countries, the unbanked can cash paychecks at ATMS or withdraw cash on pre-paid cards.

Page 3: The Global Cost of Cash and the Digital Economy

Absolute Cost of Cash

Low High

The cost of cash, including fees and the opportunity cost of time spent, varies widely across countries. High costs of cash affect countries across the income spectrum and of all population sizes.

Source: Global Cost of Cash

Page 4: The Global Cost of Cash and the Digital Economy

China

USA

India

Bangladesh

Nigeria

Average transit time and cash access costs are high in some of the world’s most populous countries

Page 5: The Global Cost of Cash and the Digital Economy

The cost of ATM maintenance is higher in parts of sub-Saharan Africa and Latin America, as well as large sparsely populated countries

ATM Unit Maintenance Cost $USD* (PPP derived)

$ 680 $ 8,876Low High

Source: Global Cost of Cash

Page 6: The Global Cost of Cash and the Digital Economy

6

AVERAGE TAX GAP

Lower Higher

Countries in the developing world tend to have a greater tax gap and a greater degree of uncertainty about the reliability of the estimate of the gap.

Source: xxxxxx

Patel, Avni
NEED TO REVISE THIS SO THE DATA IS JUST THE AVERAGE TAX GAP DATA with the spectrum gold to red
Patel, Avni
See attached spreadsheet
Page 7: The Global Cost of Cash and the Digital Economy

7

Nigeria

Philippines

Russia

Brazil

Japan

USASouth Korea

India

Belgium

Absolute Cost of Cash

Digi

talE

volu

tion

Inde

x Sc

ore

(201

3)

Colombia Poland

France

Germany

Spain

EgyptIndonesia

Netherlands

ChinaCzech Republic

Mexico

Hungary

Thailand

Finland

Sweden

IrelandDenmark

UK

New Zealand

Malaysia

Turkey

Estonia Israel

Saudi Arabia Slovenia

South Africa

Kenya

Italy• Colombia• Egypt• Hungary• India• Indonesia• Italy• Mexico• Egypt• Nigeria • Philippines• Poland• Russia• Thailand

More digitally evolved countries with high cost of cash have the greatest potential for unlocking value by transitioning to digital money

Sources: Global Cost of Cash, Digital Evolution Index

Countries with lower costs can still realize additional value by accelerating transition to digital money

Low High

GREATEST POTENTIAL

NEED TO INVEST IN DIGITAL INCLUSION FIRST

• Belgium• Brazil• China• Czech Republic• France• Germany• Japan• Netherlands• Spain• USA

Page 8: The Global Cost of Cash and the Digital Economy

8

Countries with high cash production costs (as a percentage of GDP) can benefit from savings by migrating to digital money

RIPE FOR SAVING

NEED TO INVEST IN DIGITAL INCLUSION FIRST TO SAVE

• Czech Republic • France• Estonia• Hong Kong• Japan• Turkey

• Brazil• Hungary • Nigeria• Philippines• Poland• Russia• South Africa• Thailand• Italy

Large % of population without bank account

Small% of population without bank account

Sources: Global Cost of Cash, Digital Evolution Index, World Bank Findex

Low High

Page 9: The Global Cost of Cash and the Digital Economy

Large % of population without bank account

Small% of population without bank account

Countries with higher levels of corruption are correlated with lower levels of digital evolution, as well as lower levels of financial inclusion

Sources: Global Cost of Cash, Digital Evolution Index, World Bank Findex, Transparency International

Bad Good

Page 10: The Global Cost of Cash and the Digital Economy

The Cost of Cash SeriesIn-depth country level insights

MexicoUSA India

Learn more: http://fletcher.tufts.edu/CostofCash

Page 11: The Global Cost of Cash and the Digital Economy

Research conducted by:

Institute for Business in the Global Contextfletcher.tufts.edu/IBGC@IBGC_Fletcher

Principal InvestigatorDr. Bhaskar Chakravorti

Analysis & VisualizationsChristina Filipovic, Caroline Troein, Yan Bai

With support from:

MasterCard Center for Inclusive Growthwww.mastercardcenter.org @[email protected]