“The message is clear: if you are not inside the digital system, you are increasingly out of the game.”
In many countries around the world, the use of cash (not the amount in circulation) is in decline while digital payments are in the ascendant. This trend is largely due to the superior speed and convenience of contactless digital payments. But it has also been strongly encouraged by governments, banks, central banks, big tech firms, multilateral institutions and philanthrocapitalist trusts such as the Bill Gates Foundation and the Omidyar Network.
Generally speaking, the larger and more advanced the economy, the bigger the decline in cash use. This trend began over a decade ago and was turbocharged during the COVID-19 lockdowns. In countries like Sweden, Norway, China and South Korea, less than 10% of the population continue to use cash. There are some notable exceptions to this trend, however.
In Germany, for example, a recent YouGov poll of 2,000 people found that 73% of adults still prefer to pay in cash rather than by card. Compared with 2024, the share of respondents who prefer cash increased by 4 percentage points, indicating that cash payments are, if anything, becoming more popular among the German population — even as the government and financial institutions do everything they can to restrict cash and promote digital alternatives.
Cash is still widely used in other European countries, including Spain, Italy, Austria, Portugal and Croatia, as well as economies throughout Africa, Asia, and Latin America. But there is no G20 economy quite as cash-friendly, or as cash-dependent, as Mexico, a country where most taxi drivers still only accept cash and where card payments continue to be rejected in many small retail establishments, particularly in rural areas.
Despite the efforts of financial institutions, the central bank and government, cash is still the undisputed king in Mexico in 2026. In a 2025 payments survey conducted by Banco de Mexico, 98% of respondents said they use cash for their daily expenses, such as food, beverages, tobacco and transportation. This compares with 49% for debit cards, 24% for credit cards and 13.6% for SPEI, the central bank’s instant payments system, similar to Brazil’s Pix.*
The fact that almost all Mexicans, including younger generations, continue to use cash on a near daily basis — around 85% of all retail transactions are still conducted using physical currency — makes Mexico an outlier in today’s digital-dominated world.
But Mexico’s technocratic president, Claudia Sheinbaum, is determined to rectify the situation. Her government wants to replicate the success of Brazil and India’s digitisation strategies with its own “Digital Economy Law”, which seeks to provide for a gradual — or perhaps not so gradual — replacement of cash in the retail economy with digital alternatives.
First introduced in September, the proposed legislation has swept through the Chamber of Deputies and the Senate, both controlled by Sheinbaum’s Morena party, and became law on October 20th. The new powers give the country’s Ministry of Finance authority, among other things, to determine which sectors must operate exclusively with digital payments.
Lawmakers are at pains to stress that the passage of the legislation does not imply the immediate elimination of cash, which must be a relief given cash’s massive role in the economy, but rather establishes a legal framework for progressively expanding the adoption of digital payments. But it does empower the Finance Ministry to identify specific sectors and activities where electronic payments will become mandatory.
As Alejandro Gómez Tamez, a professor of economic development at the Tec de Monterrey, notes, Mexico’s Monetary Law establishes that Bank of Mexico banknotes have “unlimited legal tender status.” How, then, he asks, can this be reconciled with allowing the Ministry of Finance to determine where those same banknotes can or cannot be used.
Once published in the official government gazette, the cash decree will enter into force the next day. The Finance Ministry will then have 15 working days to identify the first round of sectors and activities to be covered by the mandate. Sector regulators will have an additional 15 working days to issue implementation rules.
In other words, in a matter of weeks, parts of Mexico’s payments landscape could be changed beyond recognition. As Alejandro Gómez Tamez, a professor of economic development at the Tec de Monterrey, warns, forcing digital payments on a country where eight out of ten transactions are still made in cash “is a path not to modernisation but to mass exclusion”:
Mexico is no Scandinavia. Here the informal economy represents 25.4% of GDP, according to government estimates from 2024… And it encompasses roughly 55% of the working population — more than 32 million people.
So, what happens to the peasant farmer who sells his products directly to market? Or the small corner shop or mechanic who is paid exclusively in cash because he doesn’t have a bank account? And what about the areas where mobile connections are barely existent?
We are facing an accelerated transformation right at a time when events in the Middle East are pushing energy prices higher and the government wants to protect public finances. The message is clear: if you are not inside the digital system, you are increasingly out of the game…
Most Mexicans depend on cash to participate in the economy, notes Goméz Tamez: “Eliminating it, or proscribing its use in key spaces, is tantamount to restricting their ability to transact.”
As we reported in March, Sheinbaum is on a mission to reduce cash use in Mexico in the shortest possible window of time, arguing that it will help to make life easier for Mexican citizens and businesses while helping to increase government revenues:
Speaking at the recent 89th Banking Convention in Cancún, on March 19, she unveiled plans to eliminate the use of cash in key strategic sectors, beginning with gas stations and toll booths.
“Our goal this year is to make digital payments for gasoline and tolls mandatory,” the president said. “This will allow us to move forward with the digitization of the country through other schemes.”
Shienbaum praised recent improvements to the so-called “CoDi” system which can now be accessed through cell phones with zero commissions. CoDi (Cobro Digital) is a free, real-time digital payment platform developed by the Bank of Mexico, or Banxico, that has drawn comparisons with Pix, Brazil’s hugely popular instant payments system that has managed to enrage (and terrify) both Wall Street and Silicon Valley, and by extension, Donald Trump…
Needless to say, eliminating cash payments from gas stations and toll booths in the next nine months is a tall order for a country where cash is used for roughly 80% of all transactions, making it arguably the G20’s most cash-dependent economy. Governments in Mexico have been trying to replace cash with digital payment alternatives for over a decade, to little avail.
But Sheinbaum is willing to take more extreme measures than any of her predecessors, and has entrusted one of her closest advisers, José Antonio Peña Merino, to co-ordinate the plan for mass adoption of digital payments. In an exchange with a journalist, Sheinbaum said the ultimate goal is the complete elimination of cash as a means of fraud prevention:
-Journalist: Madam President, what is the objective and what will people do in rural areas if they do not have a cell phone or internet connection?
-Sheinbaum: The objective is to reach zero cash and, in rural areas, if they have a voucher, then they use that, or they can download the application of the Banco del Bienestar (Welfare Bank) and pay with it that way. They take out their cell phone and voila, the money is deducted from their application, with zero commissions. We want to prevent fraud.
The irony is that those who will probably suffer the most as a result of the government’s war on cash will be the poorest — i.e., Sheinbaum’s own voting base. Nigeria’s attempts to drastically reduce cash use in 2022 should serve as a warning of just how quickly things can unravel when governments declare all-out war on cash. Yet according to the Financial Times, Sheinbaum wants this to be a key part of her political legacy:
“The president had this in her head from the beginning, from the transition,” [Peña Merino] said in an interview. “In 2027, at least 50 per cent of adults will make at least one digital payment. I think it’ll be higher than that honestly . . . In the end, if you make a product that solves a problem, it’ll be adopted.”
There are reasons for scepticism. Seven years ago the central bank launched Codi, a payments platform comparable to Brazil’s wildly popular Pix. But consumers barely noticed as banks and businesses did not promote it and the user experience was clunky.
Peña Merino said his team had looked at two of the world’s most successful examples, India’s Unified Payments Interface (UPI) and Pix. In both, cash use fell precipitously and was replaced with free account-to-account payments, cutting out card fees.
The fact that the Sheinbaum government appears to have found inspiration in India’s recent experience with digital payments should give Mexicans pause. After all, said experience included the demonetisation of 2016, which reduced the volume of currency in circulation by 75% overnight. The direct consequences included the destruction of an estimated 1.5 million jobs, mainly in informal sectors, and the wiping out of 1 to 1.5% of annual GDP growth.
As in India and Brazil, Sheinbaum’s proposed crackdown on cash dovetails with efforts to require a biometric ID for phone and internet service, as well as other areas like healthcare, banking, and school enrolment, says Derick Broze. For the government, digitalization has an obvious attraction, notes Revista Enclave: every electronic transaction leaves a financial footprint:
A digital sale can be tied to a payment, accounting records and invoices, facilitating the inspection and fight against tax evasion, money laundering, false invoicing and the informal economy. In sectors such as fuels, where there are relevant tax obligations, this traceability can become a collection tool.
For businesses and consumers, there are also benefits: reduced cash handling, reduced operating costs, less exposure to theft, faster payments, and better financial information. In companies, a higher collection speed can improve working capital and liquidity.
It is clear why Mexico’s mainly foreign-owned banks are strong supporters of the legislation. If successful, the Digital Economy Law will bring more merchants into the digital payments ecosystem…
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