Explaining the Interplay Between Merchant Acceptance and Consumer Adoption in Two-Sided Markets for Payment MethodsRecent consumer and merchant surveys show a decrease in the use of cash at point-of-sale (POS). Increasingly, consumers and merchants have access to a growing array of payment innovations as substitutes for cash.
Cash use for payments has been steadily decreasing in many countries, including Canada and Sweden. This might suggest an evolution toward a cashless society. But in Canada, cash in circulation relative to GDP has been stable for decades and has even increased in recent years. By contrast, the cash-to-GDP ratio in Sweden has been falling steadily. What has caused this difference? Are there lessons to be learned from comparing the Canadian and Swedish experiences?