This may sound like a Sci-Fi but the creation of Cashless Society is on its way. The use of innovation is rapidly increasing in different parts of the world - in daily life activities, managing, recording, money exchanging, and different transactions involving cash are often undertaken digitally.
Some countries are now making their way to becoming the very first cashless society in the world.
Sweden for example is leading this revolution and perhaps, will hold the record of being the very first cashless society. Being an early adopter and trend-sensitive country makes them want to be the first to adopt the latest innovations and that includes the cashless trend.
Most FinTech (Financial Technology) companies were founded in Sweden and their SciFi-like microchips implantation in Swedish' hands is one of a kind skin-deep cashless experience. The implanted microchips give convenience to Swedish and eliminate the bringing of ID, bank cards, keys, even paying for train tickets, the transactions made it easier with just one wave of their hands. These tiny chips can store a big amount of data including bank cards, different IDs, and even door-opening blips.
China on the other hand is following the path of Sweden. According to fintechmagazine, only 15% of all payment transactions are made with cash, most are made through mobile applications such as Alipay and WeChat Pay. And their recent launch of Digital Yuan is their big step in becoming a cashless society.
In Russia, 45% of payment transactions last 2019 were made digitally. South Korea has set its goal to become a cashless society this 2020. Meanwhile, Rwanda is setting a goal to become cashless by 2024.
Digital wallets and online payment applications such as Apple Pay, Google Pay, Paypal, and more, which are used worldwide, provides more comprehensive payment solutions to businesses and consumers. This trend will definitely lead the shift to a cashless society at a pace impacting the financial sector. It made the transactions easier, faster, and hassle-free, with just the use of mobile phones and other gadgets.
Moreover, Blockchain is helping the world to become cashless. It enables quick transactions on a distributed ledger, a digital record stored on a network of computers around the world. It also provides a high level of security, quicker and cheaper transactions without the need for middlemen.
The big advantage of blockchain is that it supports not only the cryptocurrencies and payment systems but the whole transaction process through smart contracts. Some establishments in different parts of the world have already implemented cashless payments accepting digital currencies. It can also be used for micropayments such as paying to listen to music, watch videos, or read articles.
Blockchain can also be used in sending remittances to family members in other parts of the world through the form of cryptocurrencies and converting it to their fiat currency. Other institutions are even finding ways how they can integrate blockchain into their systems. The number of banks developing their own central bank digital currencies (CBDCs) is now increasing using blockchain.
There a lot of advantages of cashless payments which includes:
It reduced business risks like counterfeit money, burglary, and robbery. The costs of physical security and processing cash are also reduced.
Transaction speed increases and payments are done in just a matter of seconds.
It reduces the transmission of diseases via cash. Cash is considered one of the dirtiest things on earth, transferred from one hand to another. Therefore, there is a high risk of transmission of diseases via cash. However, in a cashless society, you don't need to use cash in making transactions.
Reduces criminal activity using high-denomination notes. Large notes are more valuable than counterfeit. So through cashless, money laundering, tax evasion, and other illegal activities will be reduced.
Eliminates conducting costly and periodic surveys. In a cashless society, financial transactions are recorded well and the government can track the movement of the money, thus, enabling them to track the illegal transactions and black money taking place in a country.
Cashless payments can make the consumer's budgeting easier. Since it facilitates the tracking of expenditures and the movement of money, it will help the citizens to improve their budgets more efficiently.
If there are advantages, there are always disadvantages depending on how cashless is used in society, the benefits might turn to be more problematic.
Digital payments aren't as private as the cash payment system. The more information you give online, the more likely it is to wind up in a malicious hand.
Cashless transactions are exposed to hackers who are bank robbers and muggers in the digital world.
Technical problems such as glitches, outages, and innocent mistakes could impact your access to your funds. Even a simple 'dead battery' could turn you penniless in a sense.
Payment providers might take advantage and might not offer them for free and impose higher fees, thus, eliminating the savings that are supposed to have from less cash handling.
Overspending temptations might increase since with electronic payment, it is easy to scan, swipe, tap, or click without noticing how much money they spend.
Interest rates may drop, reducing banks' profitability, thus, passing it onto consumers. The banks could hike fees to consumers to make up the deficit.
The world is pacing so fast when it comes to innovation so it's not possible that by 2025, some developed countries will become cashless. And nowadays, it is normal to see establishments with the posts 'Cards Only' or 'Cash Is Not Accepted'. This revolution is moving ahead with the help of new technology across the world and made the consumers' transactions easier and faster. However, not all people around the world are ready for the transition to a cashless society, especially the poor, the illiterates, the unfortunate ones, and the elderly.
Will this be possible for all or will remain a dream for some? Which do you prefer, cash or cashless?
Comment down your answer below.
Thanks for reading @Jane !
