Do you still use cash? If you’re like many consumers, you probably find that you’re using it less and less. In many countries, cash transactions are falling by the wayside in favor of electronic card payments, transfers, and digital wallets. In our cashless society article below, we’ll discuss what a world without cash might look like.
What is a cashless society?
A cashless society is just as it sounds – a society that functions without physical cash transactions. Instead of paying for goods and services using banknotes and coins, people use alternative payment methods including electronic transfers, credit cards, and mobile banking. These electronic methods enable bank-to-bank transfers between individuals or businesses. Peer-to-peer banking apps like Venmo and WeChat Pay are also pushing the idea of cashless transactions into the mainstream.
Governments are increasingly interested in the benefits of a cashless society, with some central banks looking into issuing digital currency rather than paper banknotes and coins. For example, El Salvador has just made history as the first country to make Bitcoin its official legal tender.
Types of cashless payments
How will you be able to make payments in a world with no more cash? Fortunately, there are numerous alternative options, many of which you’re already familiar with.
Credit and debit cards
Electronic payment apps like PayPal and Venmo
Mobile wallets like Apple Pay and Google Pay
Cryptocurrencies like Bitcoin
Quick Response (QR) codes
Electronic gift cards
ACH bank transfers
No more cash – the benefits
Why would we want to do away with cash? There are numerous cashless society articles out there highlighting the benefits, including the following:
Reduction in crime: Eliminating cash makes it harder for pickpockets to target individuals for robbery. It also makes life more difficult for organized criminals who tend to deal in less-traceable cash transactions. A cashless society can cut down on both tax evasion and money laundering, since it’s easier to trace the origin point of funds.
Greater efficiency: Printing, storing, and guarding cash takes a lot of time and effort. A great deal of energy goes into the printing and minting process, and banks spend a fortune to protect large sums of cash. Eliminating the physical aspect of financial transactions makes the banking process run far more efficiently.
Enhances international payments: When travelling abroad, you probably exchange your USD for the local currency in advance. However, when there’s no more cash there’s also no need for this currency exchange. Your mobile device or digital wallet will handle the exchange for you.
No more cash – the drawbacks
While there might be plentiful benefits to going cashless, there’s a reason we’re not quite there yet. Some downsides to this technology include the following:
Cybersecurity risks: Eliminating cash reduces the risk of individual robbery and theft, but it does make hacking more attractive to criminals. Hackers can potentially hijack electronic transactions, draining bank accounts and stealing sensitive data.
Privacy concerns: Going cashless makes it easier for authorities to track and trace each financial transaction, which cuts down on crime. Yet at the same time, it also takes away the privacy of cash payments. While some organizations carefully protect customer data, this might not always be the case.
Potential for discrimination: There’s a significant chunk of the world that remains unbanked, without access to the electronic accounts and digital wallets that many enjoy. If we cut out cash entirely, this leaves those without access to smartphone apps behind.
How long until a cashless society?
So, is a world without cash the future of money? Many financial experts think so, and indeed there are societies that are already quite close to being completely cashless. Sweden is a prime example. According to the Swedish Central Bank, less than 10% of the country’s population used cash for their most recent transactions. It’s estimated that the country will go completely cashless by 2023 as physical payments are eased out in favor of electronic payment.
However, this is just one country. When looking at how long until cashless society becomes the norm, we could have longer to wait as each country catches up with the technology required to phase out cash payments entirely. World Bank figures show that roughly 1.7 billion individuals have no bank account at all, which is a hurdle to overcome on the road to a world without cash. There are also real privacy and discrimination concerns involved which must be addressed. Still, this is a growing trend to watch.
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