Bye Bye Cash, Hello Cashless Society
Remember those times when you had a wallet? A wallet full of coins and banknotes. In today’s world, people don’t carry cash around anymore and cardholders and digital wallets have replaced traditional wallets. Cash is slowly disappearing. With the near death of personal cheque’s, increases in debit and credit card use and innovations such as Paypal, Square, Apple Pay and Bitcoin, the cashless society is well within our reach.
Today, Square lets any business accept debit or credit cards, Tikkie allows consumers to send payment requests, like a dinner bill, via Whatsapp and even for a candy bar you can use a card or phone. Almost all banking is now done through mobile devices. In the Netherlands card payments have been growing by about 10,7% annually over the past years (betaalvereniging , 2016) and the Bank of Korea is even planning for cashless society by 2020. The question thus arises, will cash become obsolete?
Electronic payments means faster, convenient and more efficient purchases. The Federal Reserve estimates that in 2016 there will be $616.9 billion in cashless transactions. In 2010, this was $60 billion. (Desjardins, 2016)
Governments support the shift for a cashless society. By having a paper trail for all transactions, crime, money laundering and tax evasion can be prevented and traced. Furthermore, a cashless society could empower central banking to have more ammunition in smoothing out the way people save and spend their money. By eliminated the prospect of cash savings, monetary policy options like negative interest rates would be far more effective when implemented.
All the money would be stored under the same banking system, instead of under a consumer’s pillow. Moreover, prudent savers could be taxed with negative rates to encourage consumer spending
Companies also love this idea of a cashless society since electronic payments are faster and much cheaper. And as far as multinationals are concerned, the sooner there’s a single global currency the better.
The cashless society is certainly getting closer from a technological point of view. For example, PayPal already has 188 million accounts, making it larger than most national banks. These days, more people own cell phones than computers hence phone companies could be the banks of the future, and for consumers their wallets. Furthermore, in the future all phones will be GPS equipped so products like holiday insurance could be sold directly on a pay-as-you-go basis, simply because the insurance company would know where you are in real-time and calculate risks and payments accordingly (“Future of Banks, Mobile Banking, Insurance,Finance”, 2016). As for security reasons, there are methods to ensure encrypted financial data. Due to this technological explosion, there are a lot of benefits and opportunities for new entrants and will lead to a strategy innovation of incumbent companies to keep up with the cashless society.
However, physical money has been with us for thousands of years. Cash is untraceable, easy to carry, widely accepted and reliable. If there is a power blackout, there is always cash. There are obviously some concerns, cases of electronic fraud have more than doubled in the past decade and the electronic system is considered as a threat to privacy.
Nobody can predict what the future will bring us, but it’s a fair bet that change will happen!
References
(2016). Betaal Vereniging. Retrieved 20 September 2016, from https://www.betaalvereniging.nl/nieuws/sterke-groei-elektronisch-betalen-2015/
Canteneur, P. (2016). Atelier. Retrieved 20 September 2016, from http://www.atelier.net/en/trends/articles/mobile-payments-surge-digital-wallet-adoption-forecast-2016_438960
Desjardins, J. (2016). The Shift to a Cashless Society is Snowballing. Visual Capitalist. Retrieved 20 September 2016, from http://www.visualcapitalist.com/shift-cashless-society-snowballing/
Eveleth, R. (2016). The truth about the death of cash. Bbc.com. Retrieved 20 September 2016, from http://www.bbc.com/future/story/20150724-the-truth-about-the-death-of-cash
Future of Banks, Mobile Banking, Insurance,Finance. (2016). Globalchange.com. Retrieved 20 September 2016, from http://www.globalchange.com/Future-of-Banks-Mobile-Banking-InsuranceFinance/
Gonser, T. (2016). 5 Things That Will Disappear In 5 Years. TechCrunch. Retrieved 20 September 2016, from https://techcrunch.com/2016/01/03/5-things-that-will-disappear-in-5-years/
PayPal: active registered accounts 2016 | Statistic. (2016). Statista. Retrieved 20 September 2016, from https://www.statista.com/statistics/218493/paypals-total-active-registered-accounts-from-2010/
