Massive jump in cashless payments – the benefits for society
16 Jul 2021
There’s been a lot of noise in recent months about the move towards a cashless society.
It seems as if the transition away from bank notes and coins is an inevitability with electronic forms of payment such as credit and debit cards, mobile wallets, payment apps, internet banking, cashless points of sale (POS) systems, and other forms of digital payments becoming increasingly favoured by more and more of us.
The data backs this up. According to a study by PwC released last month, global cashless payment volumes are predicted to increase by more than 80% from 2020 to 2025, from about 1 trillion transactions to almost 1.9 trillion, and to almost triple by 2030.
The report by the auditing giants reveals that the Asia-Pacific region will grow fastest, with cashless transactions jumping by 109% until 2025 and then by 76% from 2025 to 2030, followed by Africa (78%, 64%) and Europe (64%, 39%). Next is Latin America (52%, 48%), meanwhile North America is forecast to adapt the slowest (43%, 35%).
Which country is most cashless?
Perhaps unsurprisingly, those tech-friendly, forward-thinking Scandinavians are ahead of the curve. Sweden is almost universally regarded as the world leader in the transition to a cashless society.
The Nordic nation has less cash in circulation than anywhere else in the world, at around 1% of GDP. It’s 8% in the U.S. and more than 10% in the EU. Of Swedes aged 18-34, roughly three-quarters never or rarely use cash, according to a survey carried out by Bankomat.
Many observers are saying that the move to a global cashless society has been accelerated by the Covid-19 pandemic.
Especially at the beginning of the public health crisis that has gripped the world, official government advice in most major developed economies around the world was to, where possible, stop physically handling cash to help reduce the spread of the virus which thrives on notes and coins.
Central banks jumped in too. Take the world’s largest economies: the U.S. Federal Reserve launched a system of quarantining money; and The People’s Bank of China started to disinfect banknotes in the most virus-impacted regions.
Benefits of a cashless society
The transition, which is well underway, is a massive shift and can be expected to create considerable benefits.
Lower crime rates might be one of the most important. With no physical notes and coins available, robbery becomes significantly more difficult for would-be thieves. In addition, as there’s always a paper trail, money laundering, tax evasion and corruption can be more easily tackled.
On a more personal level, by looking at data harvested through digital transactions, as consumers we can closely track our spending habits and preferences, which might lead to greater financial security and freedom in the longer-term. Plus, it’s easier for us when we travel overseas as there’s no need to try and work out currency exchange rates – the tech will do it for us.
While paper and metal money won’t disappear completely any time soon, there’s no doubt that smart tech innovations are moving to replace them – and, ultimately, this could work in society’s favour.