What is a cashless society?
Cashless society can be simply defined as an economic concept or state where all the financial transactions take place through transfer of digital information instead of physical banknotes or coins.
If we look into the history then we’ll find that cashless societies existed since the time when human societies were in their nascent stage. Many exchange methods were prominent namely the well-known barter system.
In today’s time too cashless payments are possible due to debit cards, credit cards, mobile wallet apps, point of sales (POS), mobile banking, internet banking, etc.
Types of cashless payments
There are many different ways by which a user can make payments without cash. Let’s have a look at them one by one.
Banking cards like Debit and credit cards are one of the most used cashless payment methods across the world. Banking cards come with various benefits like secure payments, convenience, and many more.
One of the biggest advantages of banking cards is that it can also be used for making other types of digital payments. For example, a user can store his card information in the mobile wallets or digital payment apps to make cashless payment. Moreover, banking cards can be also used in online purchases, PoS machines, online transactions, etc.
There are many reputed names like MasterCard, Visa, and Rupay when it comes to banking cards.
Somewhere in the near future physical money will become like these – Relics of a different age. And will only be found in places like this. In other words hard cash will disappear. It will become electronic – transferred by things like these.
So what’s the rush to get rid of cash? And what’s the cost?
Let’s face it money is cumbersome for consumers and banks. Operating in cash costs countries about 0.5% of their GDP every year. But cost isn’t the only incentive to move towards a cashless future. Digital payments aren’t just easy – they are neat. Having every single payment automatically recorded is efficient. But there’s a downside.
Electronic-money trails can allow governments and private companies
to access and harvest personal data. But there’s another threat that is worrying banks – cyber-attacks.
Still many countries are fast moving towards a cashless society. In Sweden the number of retail cash transactions per person has fallen by 80% in the past ten years. The trend is even evident in far more cash-loyal societies. China’s digital payments rose from 4% of all payments in 2012 to 34% in 2017. The trend is inevitable but a gradual transition is key.
Some people may find it harder to grasp how much money they have without the physical representation of it. Not everyone knows how to use internet-banking technology. And people living in remote areas where internet cover is patchy may find they have to drive for miles for their basic needs. And there is another sector of society that relies heavily on cash.
Going cashless is just the latest evolution of money in the modern economy. But it raises a fundamental question – what is the value of money if it doesn’t physically exist?
The move towards cashless societies is well under way. But governments need to ensure that, as cash is phased out, the vulnerable in society aren’t left behind. They need to navigate carefully the many pitfalls that a digital economy will bring.