With the rise in the use of contactless payments and more people spending online, society is becoming ever more cashless.
So what are the benefits of a cashless economy?
It has now raised the question of whether it’s worth even use cash anymore. With more and more countries such as Sweden, Finland, and the UK aiming to become cashless societies over the coming years, will other countries soon follow suit and take the plunge into becoming cashless?
The Figures Behind the Decline in Cash
Cash usage has been declining for a while. Around the world, people and businesses are increasingly starting to transition to digital payments. In fact, in Sweden cash payments now only account for 15% of retail sales. While in the UK, cash usage declined from more than half of all transactions in 2013 to less than 40% in 2018.
In 2020, the COVID-19 pandemic has forced many countries to transition to becoming cashless, and has likely accelerated the speed at which we move to a cashless society. A recent study by Square found that between March 1 and April 23, the number of cashless businesses in the U.K. increased by 50%, and Canada saw a 39% increase.
We see a clear shift to cashless payments, and as the years go by the rate at which we use cash will only plummet.
What Would a Cashless Society Look Like?
A cashless society would mean no cash. Zero. Financial transactions would no longer be carried out in the form of physical banknotes or coins, but rather through fully digital payments. We would see all transactions become tracked, which means not only can we always see what we’re spending our money on, but things such as tax could also be automatically calculated as everything can be tracked and monitored.
Why Going Cashless Could Be Better for Society
Although there are some disadvantages of going cashless such as possible data breaches, neglecting the “unbanked”, and the increased risk of consumers overspending, by and large, the
long-term benefits outweigh any negatives. Some of these benefits include:
- Less Cash Related Crimes
Suppose people are no longer carrying cash and businesses cease storing cash on their premises. In that case, this naturally lowers the risk of a potential robbery and provides an added layer of security for individuals and companies.
The ability to evade taxes or launder money also becomes much more difficult due to all transactions now being trackable.
- Convenience and Accessibility
The convenience of having all of your money at hand, all the time make digital payments a more attractive option than cash. Being able to pay and transfer money with devices such as a smartphone makes it far quicker and easier than using cash. It means no longer even have to carry your wallet around!
- Transactions Become Fast
Financial transactions could also be executed far more quickly. According to Visa, it only takes an average of one to two seconds to process a contactless transaction, where as cash can take 6 to 7 seconds.
What Does the Future Hold for Cash?
Cash payments look set to continue to decline in use, and the idea of a society where digital payments become the norm looks increasingly more likely. Whether cash will completely become obsolete remains to be seen, but the sooner the wider population starts adopting digital banking and payments, the better.