Digital financial services are looking at an uphill climb in beating cash use in countries like Turkey, despite the undeniable growth of digital payment methods and mobile apps.
More than half of Turkey’s population is under 30, making them highly likely to experiment with newer online technologies. However, like other Middle Eastern countries, Turkey has the same problem when it comes to limiting cash use: a robust “shadow economy” and consumers who still prefer to use cash for much of their daily transactions.
Despite the country’s youthful population, 40 percent of Turkish adults don’t have formal bank accounts, making the adoption of digital payment methods — including mobile payments and card payments — somewhat tricky. This is also due to the fact that only half of the Turkish population has internet access, therefore, limiting the ability for consumers to participate in online banking.
Additionally, Turkish consumers tend to prefer cash use for many of their daily needs, including transportation and market purchases. Fifty percent of all consumer-to-business payments in Turkey are made this way, even as some Turkish banks like BKM cite plans to make the country cashless by 2023.
Turkey is not alone in this predicament. Cash share in South Africa accounts for 60 percent of the country’s gross domestic product (GDP), and Saudi Arabian consumers tend to hold onto their cash in case they see oil prices tumble. Turkey, South Africa and Saudi Arabia are seeing an influx of digital tools designed to bring more consumers into the global financial ecosystem, with the rise of apps like mada Pay, the first app in the country to support near-field communication (NFC) in Saudi Arabia. South Africa, meanwhile, seems to be adopting digital payments slightly faster than either Turkey or Saudi Arabia (though 25 percent of the country’s adults don’t have a bank account).
To hear more about that story, as well as the factors that are keeping cash at play in Turkey and other Middle Eastern markets, take a look at the brand new Global Cash Index: Middle East and South Africa edition.