Cash is going out of style. Instead of carrying a wallet stuffed with bills, you can now rely on credit cards, mobile wallet apps, and money transfer companies like PayPal to make your purchases. A cashless society might sound like something out of science fiction, but it’s on its way.

Many present-day financial practices and transactions already happen without cash, and many financial institutions, service companies, and even governments are proponents of the shift.

In many ways, these cashless systems of payment make life easier. But what if there was no cash at all? Would that be a good thing?

• What Is a Cashless Society?
• Should an Economy go Cashless?
• What will Happen if the World Goes Cashless?
• What Does a Cashless Society Look Like?
• What are the Advantages and Disadvantages of a Cashless Society?
• Is the World Ready for Cashless?
• Is a Cashless Society a Good Thing?
• Why Cashless is Better Than Cash?
• Types of Cashless Payments
• Major Benefits of a Cashless Society
• What Happens if we Get Rid of Cash?

What Is a Cashless Society?

A cashless society is one where cash—paper and coin currency—isn’t used for financial transactions. Instead, all transactions are electronic, using debit or credit cards or payment services like PayPal, Zelle, Venmo, and Apple Pay. Many countries are moving in this direction, but it’s difficult to tell which ones will eliminate cash altogether.

In addition to logistical challenges, several social issues need to be addressed before a society can give up on cash entirely. Although no existing society is cashless, many economists believe that consumer preferences, competitive pressures on businesses, profit-seeking by banks, and government policies designed to facilitate cashless transactions will soon lead to at least a few cashless societies.

Read Also: Cryptocurrencies: Are They Reliable in Business?

There are various measures of cashlessness, yielding different rankings of countries along a “cashless continuum,” but most experts agree that Sweden is now closest to the cashless ideal. Cash is now used in less than 15 percent of transactions in that country, and the value of cash in circulation has declined significantly in the 21st century, now representing about 1 percent of GDP.

Swedish retailers and restaurants are now permitted to refuse cash payments merely by posting a sign, and more than half of all Swedish bank branches no longer handle cash. To facilitate the transition to cashlessness, central banks in some countries have introduced government-backed digital currencies to replace or complement banknotes and coins.

Should an Economy go Cashless?

A cashless economy is a term that everyone uses to describe a situation where the flow of cash does not exist within the economy. All the transactions take place through electronic channels. Going cashless eases one’s life. It also helps formalize the transactions. Further, it helps to curb corruption. And also, the flow of black money results in an increase in economic growth.

Reducing cash use in everyday life is associated with lower crime rates because cash is a bearer asset, meaning those in possession of it have all its value handed to them; if it’s in your hands, you can instantly use it. The safety argument for digital currencies is that the absence of cash makes it harder for lawbreakers to commit theft and other petty crimes. 

Fully-digital currencies also offer a pathway against issues of money laundering and tax evasion. Low-level illegal transactions are mostly done through cash; each time any amount of money changes hands, the probability of tracing it back to the source diminishes substantially. 

A cashless economy also makes it easier for the population to perform any transfer. When traveling abroad or acquiring products and services from different countries, a system based on digital currencies allows for frictionless exchange in any territory. It brings cultures and businesses together with less bureaucratic hassle. In a recent article “Emergent Wealth in Asia”, Zerocap covers the growth of Asian investors in the digital sphere and how cryptocurrencies relate to that unprecedented development. 

However, like every significant change in a previously established system of our society, there are major obstacles that we must overcome. 

What will Happen if the World Goes Cashless?

Many financial experts are predicting the death of cash as a means of paying for the goods and services we enjoy. As contactless cards, mobile payment platforms, and Open Banking drive faster development of digital payment options, the need to carry cash is significantly diminished.

Only 34 percent of payments in the UK are now made using cash and, in 2017, debit cards overtook cash as the most popular payment method for the first time. Likewise, in Sweden, cash now accounts for only two percent of all transaction values, with that number predicted to fall to one percent by next year.

The situation will likely soon arise where the cost of maintaining a cash-based system will outweigh its value, and this is the point at which we may see cash becoming a thing of the past.

It’s highly probable that businesses will lead the drive to a cashless society with rising bank charges and the rapid closure of significant portions of the physical branch network (something we’ve discussed at length in previous articles) being the most likely motivator.

However, if businesses force the switch to a cashless society before consumers are prepared for it, there could be devastating consequences. A rush to a cashless society could lead to large swathes of the population becoming financially excluded and at risk of exploitation as they find themselves unable to adjust to the new status quo. The elderly members of society are at particular risk, as they are often not confident using digital payment methods or online banking services.

According to Which?, the UK is likely to go cashless in the next 15 years, but nearly 50 percent of the population would struggle if access to physical money was removed – that’s around 25 million people.

Banks, FinTechs, and government organizations need to work together to ensure the switch to a cashless society is as smooth and gradual as it needs to be, and that no sections of society are left out in the cold and financially vulnerable as a result.

There are plenty of other potential issues with a cashless society that must be considered in order to establish an appropriate state of preparedness.

Digital transactions are easily tracked and recorded, which raises questions about data security. There have been several high-profile data breaches in recent years – including Visa and Mastercard becoming compromised during the 2017 Equifax intrusion – meaning the industry still has a long way to go before it can effectively guarantee protection.

With no cash system to fall back on, these kinds of security threats could potentially be devastating in a cashless society. The risk of other crimes such as identity theft, account takeovers, and fraudulent transactions will also increase when digital payments become the only option.

Many banks are also relying on outdated infrastructure with decades-old IT systems increasing the risk of glitches, crashes, and mistakes. This could potentially leave people without access to their money at crucial times, so significant investment would be required by financial brands to bring their systems up to date before switching to cashless.

The inability to withdraw cash from the financial system would also give governments and banks greater control of the economy via monetary policy. There would have to be significant legislation drawn up to make sure that no organization is able to abuse such a system in this way.

It’s Not All Bad Though

It may seem like there is a lot of risk associated with switching to a cashless society, but there are positives to be found as well.

The anonymous and untraceable nature of physical cash makes it the ideal format for organized criminals to use. Those involved in bribery, tax evasion, money laundering, counterfeiting, corruption, and terrorist financing all rely on this aspect of cash to carry out their crimes, which would become significantly more difficult with trackable and traceable digital payment systems. Concealing income and tax evasion also becomes even more difficult without the “cash in hand” option of receiving payment.

While the potential for data breaches will be present, the range of tech-based authorization methods can also make digital banking more secure than cash. Biometrics, such as retinal scans, facial recognition, and voice, can all make your smartphone-based payment options more safe and secure than your wallet ever could be.

What Does a Cashless Society Look Like?

Without cash, payments happen electronically. Instead of using paper and coins to exchange value, you authorize a transfer of funds from a bank account to another person or business. The logistics are still developing, but there are some hints as to how a cashless society might evolve.

• Credit and debit cards: Cards are among the most popular cash alternatives in use today, but cards alone might not be enough to support a 100% cashless society. Mobile devices could become a primary tool for payments instead.
• Electronic payment apps: Apps like Zelle, PayPal, and Venmo are helpful for person-to-person payments (P2P payments). In addition, bill-splitting apps allow friends to split their bills easily and fairly. Fintech companies like Stripe, Adyen, and Fiserv support business-to-consumer (B2C), business-to-business (B2B), or what they now merge into account-to-account (A2A) online payments in a reliable and speedy fashion.
• Mobile payment services: These services, along with mobile wallets like Apple Pay, provide secure, cash-free payments. Many nations that use cash sparingly have already seen mobile devices become common tools for payments.
• Virtual currencies: Cryptocurrency is already part of the discussion. Crypto is used for money transfers, and it introduces competition and innovation that may help keep costs low. However, there are risks and regulatory hurdles that make cryptocurrencies impractical for most consumers, so they might not yet be ready for widespread use.

What are the Advantages and Disadvantages of a Cashless Society?

Those with the technological ability to take advantage of a cashless society will likely find that it’s more convenient. As long as you have your card or phone, you have instantaneous access to all your cash holdings. Convenience isn’t the only benefit. Here are some other benefits.

Lower Crime Rates

Carrying cash makes you an easy target for criminals. Once the money is taken from your wallet and put into a criminal’s wallet, it’ll be difficult to track that cash or prove that it’s yours. One study by American and German researchers found that crime in Missouri dropped by 9.8% as the state replaced cash welfare benefits with Electronic Benefit Transfer (EBT) cards.

Automatic Paper Trails

Similarly, financial crime should also dry up in a cashless society. Illegal transactions, such as illegal gambling or drug operations, typically use cash so that there isn’t a record of the transaction and the money is easier to launder. Money laundering becomes much harder if the source of funds is always clearly identifiable. It is harder to hide income and evade taxes when there’s a record of every payment you receive.

Cash Management Costs Money

Going cashless isn’t just convenient. It costs money to print bills and mint coins. Businesses need to store the money, get more when they run out, deposit cash when they have too much on hand, and in some cases, hire companies to transport cash safely.

Banks hire large security teams to protect branches against physical bank robberies. Spending time and resources moving money around and protecting large sums of cash could become a thing of the past in a cashless future.

International Payments Become Much Easier

When you travel, you may need to exchange your dollars for local currency. However, if you’re traveling in a country that accepts cashless transactions, you don’t need to worry about how much of the local currency you’ll need to withdraw. Instead, your mobile device handles everything for you.

Disadvantages

Depending on your perspective, going cashless might be more problematic than beneficial. Here are some of the major downsides associated with a cashless financial system.

Digital Transactions Sacrifice Privacy

Electronic payments aren’t as private as cash payments. You might trust the organizations that handle your data, and you might have nothing to hide. However, the more information you have floating around online, the more likely it is to wind up in malicious hands.6 Cash allows you to spend money and receive funds anonymously.

Cashless Transactions Are Exposed to Hacking Risks

Hackers are the bank robbers and muggers of the electronic world. In a cashless society, you’re more exposed to hackers. If you are targeted and somebody drains your account, you may not have any alternative ways to spend money. Even if you’re protected under federal law, it will still be inconvenient to restore your financial standing after a breach.

Technology Problems Could Impact Your Access to Funds

Glitches, outages, and innocent mistakes can also cause problems, leaving you unable to buy things when you need to. Likewise, merchants have no way to accept payments when systems malfunction. Even something as simple as a dead phone battery could leave you “penniless,” in a sense.

Economic Inequality Could Become Exacerbated

Unless special outreach efforts are made, the poor and unbanked will likely have an even harder time in a cashless society. If smartphone purchases become the standard way to transact, for example, those who can’t afford smartphones will be left behind. The UK is experimenting with contactless ways to donate to charities and homeless individuals, but these efforts may not be developed enough yet to substitute cash donations.

Payment Providers Could Charge Fees

If society is forced to choose from just a few payment methods, or if one app becomes the standard payment app, the companies who develop these services might not offer them for free. Payment processors may cash in on the high volumes by imposing fees, which would eliminate the savings that should come from less cash handling.

The Temptation To Overspend May Increase

When you spend with cash, you recognize the financial impact by physically taking the cash out of your pocket and giving it to someone else. With electronic payments, on the other hand, it’s easy to swipe, tap, or click without noticing how much you spend. Consumers may have to rethink the ways they manage their spending.

Negative Interest Rates Could Be Passed Onto Customers

When all money is electronic, negative interest rates could have a more direct effect on consumers. Countries like Denmark, Japan, and Switzerland have already experimented with negative interest rates.

According to the International Monetary Fund, negative interest rates reduce bank profitability, and banks could be tempted to hike fees on customers to make up for that deficit. Banks are limited in their ability to pass on those costs because customers can simply withdraw their cash from the bank if they don’t like the fees. In the future, if customers can’t withdraw cash from the bank, they may have to accept any additional fees.

Is the World Ready for Cashless?

Although the technology is available today to enable a completely cashless society, we are still a while away from it, at least generically speaking. In most economies around the world, COVID has been a catalyst for digital adoption. We are moving into a society that is predominantly digital and cashless, but we’re not ready for an environment where there is no cash. There are several sections of society today that are not digitally native and don’t have access to infrastructure that enables them to be completely digital.

Some economies are more ready for cashless societies than others. Sweden, for example, is very close to becoming completely cashless. The country has a publicly stated mandate to go cashless by 2023. Even before COVID, about 75-80 per cent of transactions in Sweden were already cashless.

Norway is another country that is close to a cashless future. Only about 3-5 percent of point-of-sale transactions in Norway are carried out with physical cash and over 95% of the population uses mobile apps.

Overall, however, while the pace of digitization is accelerating, examples such as Sweden are likely to be few and far between.

In addition to the fact that a cashless economy can bring down the cost of printing, storage, and circulation of cash, the biggest motivator is convenience, transparency, and traceability. This can not only curb fraudulent transactions but it can also simplify cross-border transactions, especially using blockchain technology.

Over the last few years, there has been a tremendous disruption in the payments space brought about by pay-techs and fintech. As an increasing number of people have moved towards doing things electronically, concepts such as ‘Buy now, pay later (BNPL) have become popular. Trends such as BNPL lend themselves well to digital transactions and are more congruent with cashless or digital environments.

Financial settlement forms just one leg of a transaction and is not the entire transaction. To sustain a truly cashless experience, the entire system as a whole must go digital. In most countries, for example, while transactions are completely digital, auxiliary functions such as account opening still require physical documentation due to regulatory requirements. Moving to a completely cashless ecosystem becomes easier if all elements in the environment are digital.

Even in the case of more technologically progressive economies such as in the West, not every financial institution is fully ready for digital verification and the digital onboarding of a customer.

Several factors such as organizational readiness, the associated regulatory environment, digital infrastructure, and customer awareness have a significant impact on the adoption of a cashless economy.  Therefore, a regular dialogue with all stakeholders including regulators, banks, fintech, and customers is key to envisioning a cashless society.

Is a Cashless Society a Good Thing?

The move towards electronic and contactless payments has been gaining momentum for some years, but increased rapidly during the pandemic, to minimize unnecessary physical transactions.

Many assume we are inevitably becoming a cashless society, but is this true — or a good thing?  

Here we explore the pros and cons, impacts and effects of a cashless society and look to a future where traditional currency may eventually be history. 

Cashless society: advantages

One major advantage of going cashless is a significant reduction in crime.

When people are handling less cash, bank robberies, burglaries and corruption drop.

Because cash is essentially untraceable, it’s a useful tool for criminals, where digital currency is less easy to exploit, and can be shut down quickly if it falls into the wrong hands. 

Advances such as biometrics — where individual physical and behavioral characteristics are measured and analyzed — make copying and fraud increasingly difficult.

Innovations such as embedded microchips, NFC (Near Field Communication) technology, AVS (Address Verification Service), digital wallets, geolocation and artificial intelligence payment systems will all continue to strengthen security around cashless transactions.  

Supporters of cashless transactions also point to greater ease in the everyday management of money, for individuals and businesses. The need to store, protect, withdraw and deposit physical money disappears. 

International travel would also be more convenient without the exchange of paper currencies. 

The reason cashless payments increased significantly during the pandemic is also a legitimate advantage in the longer term.

Less physical contact in the everyday economy minimizes the potential for future pandemics to gain traction.  

Cashless society: disadvantages

A cashless society would not be good for everyone. According to the Access to Cash report, published before the pandemic in 2019, up to one in five British citizens could be left behind by a transition to digital-only transactions. 

Elderly people may be less comfortable with tech and less able to make the switch from physical currency.

Rural communities could also be left vulnerable, because of poor broadband and mobile connectivity. People with low income or debt tend to find cash easier to manage too. 

Another potential disadvantage concerns security. Although abandoning cash helps to reduce theft and fraud, for many consumers, data and cybersecurity issues are a worry — with justification.

Threats from organized cyber-criminals are very real, and they frequently find new ways of breaching established security systems. During the pandemic, many more of us made online and mobile purchases, and data breaches increased to match. 

A concern closely linked to security is privacy. Identity theft and compromised personal information are potential dangers in a cashless economy, but privacy might be compromised in other ways too.

When you pay digitally, you always leave a digital footprint, and this footprint is easily monitored by financial institutions. Understandably, consumers are uneasy about their data being harvested or tracked by big businesses.   

Many people also feel that cashless spending is more difficult to control. It’s simply too easy to overspend when you’re not looking at a finite, physical sum of money in your wallet or purse, so careful budgeting becomes important. 

Beyond individual consumers, the cashless society could also prove costly for small businesses.

Most credit card and mobile payments attract a up to three percent processing charge, which will quickly eat into small profit margins, making it hard for independent shops and small-scale specialist outlets.   

In an unpredictable world, there is always a concern about system vulnerability. How resilient is the technology that supports a cashless society?

Natural disasters or even large-scale cyber attacks could render entire financial systems useless, preventing people from accessing their money or buying what they need. In this scenario, the old-fashioned, physical quality of cash seems reassuring.  

Why Cashless is Better Than Cash?

Cash is king! This quote is facing a serious threat as the world is marching towards becoming a cashless society. The recent trends suggest that digital money will soon replace physical cash. Many countries are making active efforts to remove cash in circulation – Sweden is its prime example.

In Sweden, Cash is no longer king! That’s why it’s also known as the pioneer of the cashless society. In Sweden, buses haven’t taken cash for years. 900 out of Sweden’s 1600 bank branches don’t accept cash deposits.

New technology and tools that support cashless payment options such as tapping a smartphone, waving and paying with a card, or sending an online Peer-to-Peer payment have hastened this process along with changing societal norms and consumer preferences. It feels as though we truly are on our way toward a cashless society.

However, if you consider this potential more in-depth, this breaks down along generational and class lines. Younger, more prosperous consumers are much more likely to prefer cashless payment approaches. Older consumers with limited resources and possibly less enamored with technology are more likely to use cash.

No matter where a consumer falls in this spectrum, the overall trend leans towards cashless payment methods. In fact, according to a recent study, 80% of those polled prefer card payments over cash. And card payments are increasing in both value and number.  

In short, a cashless society may be on the horizon. Is this a good or a bad thing? Let’s take a look at both sides of the issue. 

Pros of going cashless

Here are some of the key benefits of a cashless society.

• Simplicity and Convenience: The most obvious benefits of a cashless society are simplicity and convenience. What can be easier than sending a P2P payment or tapping your phone? There’s no need to visit a credit union branch or ATM to obtain cash or worry about not having enough cash on hand to make a purchase.
• Cost savings: The manufacturing of bills and coins is expensive–and cash handling is even more so. Think about everything that a retail business needs to do with cash–store it, withdraw it, deposit it, etc. And, in the case of credit unions or other financial institutions, consider the cost of security, gasoline, truck maintenance, etc. when transporting large sums of cash between locations. 
• Less crime: How many movies have you seen that involve an armored car heist where the criminals run off with the cash? In a cashless society, that cannot and would not happen. Consumers would be less likely to be targeted for street crimes if they aren’t carrying cash as they do today. For example, crime in Missouri declined by close to 10% when the state implemented the use of Electronic Benefit Transfer (EBT) cards instead of cash welfare benefits. 
• Paper trails: Cash is notoriously difficult to track and trace. But, when there’s an electronic record of all transactions, crimes like money laundering become much more difficult. It’s also a lot harder to conceal your income from the I.R.S. and evade taxes when every payment you receive is recorded. 
• Easier international travel: In the past, it was necessary to exchange dollars for the local currency when visiting a foreign country. But in a cashless society, it’s possible to make purchases anywhere in the world just by using a mobile phone or card.

Cons of a cashless future

In addition to these clear benefits of a cashless society, there are some distinct disadvantages. Let’s explore them.

• Lost privacy: With cash payments, you can send and receive funds safely and anonymously. But that’s not possible with electronic payments, which leave a digital trail behind them with a wealth of information about both your transaction and you. 
• Security risks: Electronic payments are fat targets for hackers whose goal is to obtain and use transferred funds for their own malicious purposes. At the same time, a cashless payment is like an open door to identity theft since so much information about individual consumers can be stolen.
• Technology issues: Making a cash payment is a simple, low-tech act. There’s no need to worry about buggy software, bad network connections, service outages, limited server space, or other technical glitches. But in a cashless society, where even a dead cell phone battery can cut a consumer off from access to his or her funds, such technology issues can be quite challenging. 
• Economic inequality: In a cashless society, the poor and underbanked would likely face serious issues. For example, how do you pay for a product or obtain funds if you can’t afford a cell phone? This can deepen class rifts and leave the less fortunate disenfranchised. It might even lead to a black market where cash is sold at a premium and poorer people are taken advantage of because they have no other recourse. 
• Ease of overspending: It’s a lot easier to overspend in a cashless society than when using cash. All you need to do is tap, swipe, or click and you’ve made a purchase. It isn’t until the bills come due that you might realize how much you’ve actually spent. 

The cons of a cashless society are clear but so are the benefits. Realistically, the future is already here and the steadily increasing use of cashless payment methods means that one day cash may become obsolete. Meanwhile, greater security and enhanced technology will help support the ongoing growth of cashless payment approaches.

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

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 mobile wallets or digital payment apps to make a 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.

USSD

Unstructured Supplementary Service Data (USSD) is a cashless payment option for those who don’t have a smartphone. The USP of this method is that the user can make payments without a smartphone device or internet facility.

In this method, the user must dial *99# to interact with an interactive voice menu via a mobile screen. However, to use this service, the customer must ensure that his mobile number is the same as that of the one linked with the bank account.

This service is pretty similar to the IMPS and it uses the MMID and MPIN with mobile number or account number with IFSC code for a successful transaction.

Mobile wallet apps

Mobile wallet applications are quickly gaining traction due to its fast, secure, and convenient payment methods. These are mobile applications that allow the user to send, receive, and store money.

A user can add or store money in his wallet by simply linking his bank account. Similarly, a user can also send money to his friends, relatives, or any other person by entering phone number, email ID, unique ID, or scanning QR code.

Moreover, a user can also make payments to merchants and pay various utility bills like water bill, electricity bill, mobile recharge, and many more directly from the mobile wallet app.

QR Codes

QR stands for Quick Response. It’s a two-dimensional code that has a pattern of black squares which are arranged on a square grid. QR codes are read by imaging devices such as smartphone cameras.

QR codes are widely used for making cashless payments in which a user just has to scan the QR code of the merchant service to complete the transaction.

Contactless payments

Contactless payment is a convenient and secure method that enables users to purchase products by simply tapping a card near a point-of-sale terminal. The card can be simply a debit, credit, or smart card which is also known as the chip card that is based on NFC (near field communication) or RFID technology.

Contactless payments are extremely convenient as it doesn’t require any signature or PIN. Moreover, you can also make contactless payments via NFC-enabled phones that are directly linked with mobile wallet. In this, the user has to simply keep his NFC-enabled phone near the reader to make the payment.

User can make payments via NFC-enabled phone at various places such as:

• Fuel stations
• Toll booths
• Parking garages

ECS

Electronic clearance service is widely used for making bulk payments, equated monthly installments, paying off for utility services, and to disburse payments like dividend interests, pensions, and salaries. ECS can be used for both credit and debit services.

To initiate the ECS, authorization has to be provided by the bank for making periodic credits and debits. ECS is a safe method as you can provide instructions for the maximum sum of debit, validity period, and the purpose of the transaction.

Gift Cards or vouchers

Gift vouchers are a great gift idea apart from being a handy way to go cashless. It enables the receiver to buy anything with the help of a voucher. There are also various stores that give discounts on gift vouchers.

PoS terminals

Traditionally, PoS terminals are nothing but a handheld device present at the stores. These devices are used to read banking cards of the customers. However, the scope of PoS is expanding as these services are now available on various mobile platforms via the internet.

Nowadays, PoS can be bifurcated into different types like Physical PoS, virtual PoS, Mobile PoS, etc. Mobile PoS is beneficial for small businesses as they don’t need to invest in expensive electronic registers, since the Mobile PoS operates through smartphones and tablets. Similarly, virtual PoS systems use web-based applications for its operation.

Major Benefits of a Cashless Society

Reduced costs and business risks

Cashless payments eliminate several business risks at a time such as theft of cash by employees, counterfeit money, and robbery of cash. Moreover, it also reduces costs of security, withdrawing cash from bank, transporting, and counting.

Transaction speed

Making cash payments is time consuming for customers as well as the merchant or employee. That’s the reason why many businesses have decided to go cashless so that they can leverage faster transactions and increased efficiency.

Atlanta’s Mercedes-Benz Stadium is one such company that decided to go cashless and found out that it resulted in faster transactions, lower waiting times, and reduced end-of-day reconciliation time.

Sweetgreen and Salad chains also found similar benefits. Sweetgreen found out that they were able to process 5-15% more transactions per hour at their cashless locations. Similarly, Tender Greens found out that cash transactions were 4-5 times slower than that of card transactions.

Faster transactions also lead to enhanced customer satisfaction, increased revenue, and fewer errors.

Seamless international payments

Whenever someone visits a foreign country, they need to buy foreign currency. However, with cashless payment solutions, they don’t need to do it any longer as they can make transactions directly from their cashless payment apps in accordance with the currency exchange rate.

Better compilation of economic data

Government and other organizations spend a lot of money to conduct periodic samplings and surveys to gather data of real-world transactions of the citizens. These data help them in devising various policies. However, the process is costly, time-consuming, and less efficient.

Whereas, all the cashless payments made are recorded financial transactions, which makes it easy for the government to track the movement of money through these records. These records also help them to track black money and other illegal transactions.

An efficient tool to fight corruption

There are an estimated 1.4 billion people in the world who make less than a meagre $1.25 a day. On the other hand, around an estimated $1.26 trillion is stolen from developing countries through corruption, taxi evasion, and bribery.

We can easily uplift those 1.4 billion people if we can somehow reclaim that amount. This is where cashless payments play a crucial role. Cashless payments can become one of the greatest means to fight corruption and organized crime throughout the world.

If all the people were connected via end-to-end payment infrastructure that makes a cashless environment, then there would be complete transparency in the flow of money.

No matter, if it’s a private investment or international aid, everyone digitally connected in the cashless environment would be able to view where exactly the money went and how it was spent.

Any amount of money that is found outside the framework can be easily detected and investigated.

Any sum appearing outside of that framework could immediately be flagged and investigated. This would narrow the focus for law enforcement and forensic accountants, making it easier to target and recoup hidden money.

Eliminating the middleman

The concept of a cashless society is a broad one and it is more than just the shift from cash payments to cashless payments. The reason behind is that the mere shift won’t have a major impact as private companies are already involved in the processing of the transactions. So, even if we achieve the shift, there will inevitably be a cost.

A true cashless society would be one where there’s total exchange of value without any loss (processing costs or any other cost). And to achieve this, we would require the national government instead of banks or any other payment provider, thus effectively making it a state-backed utility.

The money saved in such a cashless society due to the absence of processing costs can be then used for those in need. The saved amount can be then used to rejuvenate financially depressed areas.

Read Also: Role of Currency in International Business

In a true cashless society, everyone will have access to capital. The cashless society along with the last mile of money transfers, banking services, and payments will play a pivotal role in achieving worldwide financial inclusion.

What Happens if we Get Rid of Cash?

In 2016, the European Central Bank (ECB) announced that it would stop minting €500 notes, in a move that they say is meant to curb fraud and money laundering. The 500 euro note is the second-largest denomination currently across the common euro currency zone, and the ECB says that it is the banknote of choice among criminals.

While the stated purpose was to stop financial crime, others have speculated that this move was part of a recent “war” on cash, essentially with the government trying to get rid of cash and eliminate money from the economy.

In a “race to the bottom” to weaken currencies in order to stimulate flagging economies around the globe, we may ultimately see a complete elimination of paper cash in favor of electronic money – not to be confused with digital currency, such as bitcoin, but rather fiat currencies stored as entries in bank accounts.

Analysts at Bank of America Corp. (BAC) have also suggested that eliminating high-denomination banknotes can effectively weaken a currency in global foreign exchange markets. Without a high-value euro bill, people who want to hold cash (rather than spend it) will trade in their euros for higher denominations in other currencies, like the 1,000 note Swiss Francs or U.S. $100 bills. If this analysis is correct, scrapping high-denomination notes would also serve the ECB’s motives of indirectly weakening the currency so as to boost exports and spur economic growth.

Paper money also makes it easy for people to withdraw large sums of money from their banks, which can be a cause of bank runs in a fractional reserve banking system, and was a big problem during the 2008 financial crisis.

If banks have to pay negative interest rates persistently to central banks, they will ultimately have to pass this cost on to their customers. If a bank charges you a negative 1% interest on your deposits, you are much more likely to withdraw your money in the form of cash. Making it harder to effect those large withdrawals will help stabilize the financial sector in such a case.

Unfortunately, eliminating cash will likely do little to reduce crime as there are multiple ways to circumvent the need for cash, and even worse, cutting off cash may just lead criminal organizations to innovate and use pre-paid gift cards, digital currency, or bank checks to elude law enforcement.