Cash is rapidly disappearing in consumer transactions across Asia, replaced by QR codes and other smartphone-based technologies. Physical money is forecast to make up just 14% of total transactions by 2027, down from around 47% in 2019, according to Worldpay, a US-based payment processing company.

The shift to cashless payments is also driven by efforts from India and other countries to promote domestic digital settlement systems and reduce the dominance of Western credit card brands.

In Mumbai, motorcycle couriers now deliver food and daily necessities quickly, often within ten minutes, with the entire transaction completed via smartphone. Many of these services do not welcome cash payments. The share of cash settlements by value is expected to drop to 10% by 2027, down from 71% in 2019.

In 2016, the Indian government, working with financial institutions, introduced the Unified Payments Interface (UPI), a mobile payment system that allows users to make real-time payments. The system underpins app-based delivery services and other businesses. More than 131 billion transactions were made via UPI in fiscal 2023, according to PwC India.

In mainland China, where over one billion people already use Alipay and other digital payment apps, the share of cash transactions is expected to drop to just 3% by 2027.

Douglas Feagin, president of Ant International, operator of the Alipay service outside China, said the company plans to expand its merchant network in Asia and other markets. The number of overseas shops that accept Alipay has already exceeded ten million.

The cashless trend is advancing rapidly in Asia. The average share of cash transactions across 14 countries and regions is expected to fall 33 percentage points from 2019 levels to 14% in 2027, just above Europe’s 12%.

French consultancy Capgemini forecasts there will be 1.46 trillion cashless transactions in the Asia Pacific region annually by 2028, more than four times as in North America, where credit cards are widely used.

Growing use of smartphones is fueling cashless transactions in Asia. Cashless payments were slow to gain traction in Southeast Asia, where fewer bank accounts meant less credit card use in the region compared with the US and Europe. But smartphones have changed that. With just a phone number and a few other details, transactions have become easier, enabling more people to go cashless.

Worldwide, the average share of smartphone-based payments at storefronts is expected to reach 46% by 2027, more than double the 22% share of credit card payments.

Nationalism is another driver of cashless payments in Asia. The Indian and Chinese governments are promoting their own payment networks to challenge international credit card brands like Visa and MasterCard, which charge fees of a few percent per transaction and collect large amounts of data from both cardholders and merchants.

In Southeast Asia, countries are collaborating in QR code-based digital payments. Users of Thailand’s PromptPay and Singapore’s PayNow can transfer money between the two countries. Studies are underway to create a cross-border real-time settlement system in the region.

“Southeast Asian nations are working to establish an ‘Asian settlement bloc’ by creating a system independent of foreign payment networks,” said Akira Yamagami, a fellow at NTT Data Institute of Management Consulting in Tokyo.

However, many of these initiatives are government-led and aim to keep user fees low through regulation. To ensure the settlement systems’ sustainability, operators must be able to make enough money to innovate, while keeping fees at levels acceptable to both consumers and retailers.

This article first appeared on Nikkei Asia. It has been republished here as part of 36Kr’s ongoing partnership with Nikkei.