It’s clear the emerging cashless society is a goal being pursued by governments for more electronic control and overall efficiency, by consumers for more convenience, and by businesses for quicker payments and higher profits.
Australian authorities have announced the country could become cashless as early as 2022.
While in Belgium, over 80 percent of adults have a credit card, and nearly 90 percent of the total volume of financial transactions are electronic. A maximum limit of 3,000 euros on any cash transaction has also been imposed there.
Sweden is another case in point, with less than 20 percent of all consumer payments now made in cash. Monetary authorities in the country even announced recently they’re preparing for the day in the not too distant future when they will phase out notes and coins completely.
One study showed that eight out of 10 young adults in Western Europe don’t carry any cash on them. In a few years, when they become the majority of consumers, this will likely spell the end of cash and trigger an upheaval in banking services.
Governments are struggling to keep up with the digital requirements of consumers. Due to the fast pace of digital services growth and consumer expectation, there are still many small cities and touristic locations across the world that lack sufficient infrastructure while employees lack basic digital skills, meaning they’ll probably lose business as consumers chose other locations to spend their money. For example, if 4G/LTE coverage is not sufficient in some areas, how can you use your mobile to make payments? It’s just easier to not go there. So, a cashless society can be detrimental to the economy of a whole country that isn’t ready.
Emerging economies like India are aiming to become cashless. But they face a major challenge: the majority of their citizens are still unbanked.
This is a common issue faced by all the less developed nations and will be the reason a cashless future is delayed in such countries, including all Arab countries, depending on the different levels of banking and personal financial services penetration. As you would expect, Gulf countries are at the forefront of this movement. A study by McKinsey found that 2.5 billion adults worldwide are still unbanked. Africa, Asia, Latin America and the Middle East account for 2.2 billion.
However, the trend on a global scale is clear. The Chief Executive of Deutsche Bank, John Cryan, predicted last year that cash probably wouldn’t exist in 10 years’ time.
But not everyone is pleased with the notion of a cashless society. There are many commentators and social society organizations that view this transition with suspicion; believing that governments are pushing for it to digitally track every transaction for tax purposes. By extension, it also means authorities will know what you’re using the money for, when and where you are spending it. It could be viewed as another encroachment on our personal privacy.
In fact, all non-digital payment instruments will disappear. Checks are increasingly obsolete and even the plastic credit cards themselves, which replaced cash, are going to disappear as the concept of a ‘credit card’ becomes a number and a pin code on your PC or mobile, tied to your fingerprint or eye retina!
So it’s also bad news for those trading in illegal products and services. Taking cash off the streets, will deliver a blow to crime. What’s the use of robbing a person not carrying cash, but a secure credit card number or a mobile wallet? New age criminals will need to have tech skills, to electronically steal, which means they will have to be among the ‘digital haves’ and not disadvantaged since their childhood. There will even be economic class divides in crime! The whole ‘shadow economy’ that depends on cash is coming to an end! This will probably cause social unrest for a transitional period of, perhaps, a generation.
While we take an overall look at the positives and negatives; ultimately, a cashless society means that all your personal money and transactions will be in an “accessible electronic record’. We are all giving up our privacy, and various freedoms, for convenience. Think about that.