Written by Andrew Nunn
Take a moment to reflect and recall the last time you drew money from an ATM or paid for a relatively large transaction with physical cash.
Is Cash King?
This quote is under serious threat as the modern world is fast approaching a completely cashless society. Recent technological advancements and trends suggest that digital methods of payment will soon replace physical cash. There are currently hundreds of applications that facilitate the process of cashless transactions and this means that we could very soon see the demise of dirty banknotes sitting in your wallets and jean pockets.
Many countries across the globe are making active efforts to entirely remove cash in circulation – Sweden currently taking the lead in the race.
In Sweden, cash is no longer king and was dethroned many years ago. That’s why it’s also known as the pioneer of the cashless society. In Sweden, buses haven’t taken cash for almost 10 years. 900 out of Sweden’s 1600 top bank branches don’t accept cash deposits. The majority of institutions within the hospitality and entertainment industry no longer accept cash as a viable payment method.
Sweden has declared that by March 2023 they will become the world’s first completely cashless region, with an economy that goes 100 percent digital. According to the Swedish Central Bank, about 80 percent of Swedes use cards with 58 percent of payments being made by card and only six percent made in cash.
A few types of cashless payments:
- Banking cards
- Mobile wallet apps
- QR Codes
- Contactless payments
A couple of major benefits of a cashless society
- Reduced costs and business risks
- Transaction speed
- Better compilation of economic data
- An efficient tool to fight corruption
Although there are numerous and obvious benefits to a completely cashless society, not all the repercussions are positive.
Both individuals and societies must consider the pros and cons of looking to forsake cash and adopt digital payments. It is convenient to pay with a card or phone, but this comes at the expense of privacy. Paper money guarantees anonymity to some extent, while digital money guarantees no anonymity at all. Banks, credit information suppliers, government institutions, not to mention payment organisations such as Mastercard grew by nearly 45% since the pandemic started – all of them gain lots of profits from customer-generated data.
Digital money opens up the doors to a variety of fraud and digital scammers – this has become more than apparent over the last 18 months with a massive spike in fraudulent activity within the cashless environment.
A fully cashless society appears to be many years away. But a major FinTech advancement could very well shorten this period. With the introduction of cutting-edge technology and constant improvement of existing technologies, we might see faster, more transparent and more secure cashless payments than ever. But only time will tell when we will truly become a cashless society.
Read more about the use of cashless society and the future of digital payments or click here to read about the death of cash.
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