Fintech Future: How Soon Will the World Be Cashless?

Just a decade ago, a world without coins and banknotes was unthinkable. Sure, the digital forward among us could predict a day when cold, hard cash was no longer a necessity. But it mostly seemed like a dream – because most people globally had such great faith in cash.

Despite the fact that even as far back as 2012, the majority of the transactions that took place were carried out via debit and credit card transfers, cash remained the king.

Then came COVID, and everything changed. Although digital payments had made significant inroads by 2020, a cashless world was apparently still decades away. According to a study conducted by the British charity Age UK in October of the same year, an estimated eight million people in the UK alone would have struggled with the concept of a cashless world.

Today, with financial inclusion as a leading strategy for the vast majority of digital banks and fintechs, it can soon become a reality to live without the clinking sound of pocket money. But what are the pros and cons?

Are we ready to go without money?

Despite advances in blockchain technology and a wealth of news from the central bank’s digital currencies, many leading experts in the field believe that we are still a long way from a fully digital global economy.

Udo Mueller, CEO of Paysafecard at Paysafe, does not anticipate that the incident will occur immediately: “The current reality is that we are not and may never be ready for a truly cashless society. If cash were to disappear tomorrow, it would only exacerbate the difficulties of the most vulnerable members of society, and the levels of economic exclusion would be detrimental to the economy.

“As government policy in India moved towards encouraging a cash-free society, farmers were unable to buy seeds for their crops, and low-wage earners were forced to choose between a day’s work and spending the day queuing to exchange cash. in the bank.

“Even countries like Sweden, where there are higher levels of equality and financial inclusion, had to introduce measures to slow down the change towards becoming cashless to ensure that vulnerable and rural people were not left behind. This shows that although the role of cash may change even the pandemic has not been able to accelerate us towards a truly cashless society. “

Expert Market Advisor Zara Chechi agrees: “Even though most people are addicted to cashless forms of payment, such as Apple Pay and online payments, they can still access their cash by stopping by an ATM. In a cashless society, this will no longer be an option, and there is a feeling that people will struggle without the security of knowing that they can physically access their money again. “

The disadvantages of a cashless environment

Whether we like it or not, access to cash is becoming increasingly challenging for consumers. Banks are moving away from their traditional role of delivering or receiving cash in person, especially in rural areas. However, Mueller points out that physical currency remains crucial to accessing certain services and the wider banking system.

“Many people are concerned that cashless payment methods are dependent on technology, which comes with its own risks,” he says. “For example, if there was a disaster that caused major power outages or broadband failures, the economy would be paralyzed without anyone being able to pay.

“For others, the use of cash is simply a preference, a choice that allows consumers to control their finances even when making online payments. Furthermore, cash also gives a sense of control over personal data, with many people becoming increasingly concerned about how their data is collected and shared by companies – cash payments are a way to narrow their data track. “

The lack of confidence in today’s technology is not unjustified. With cyber attacks and scams becoming increasingly common, security for online financial transactions requires ever-increasing levels of protection. This now usually extends to biometric methods that track voice intonations, eye markers, fingerprints and more.

Sahar Salama, CEO and founder of the full-service mobile payment platform TPAY MOBILE, notes that increased digitalisation of the economy creates a divide between the technologically savvy and unlicensed groups. She says this requires appropriate government policy so that everyone can take advantage of the new opportunities in the digital world.

“As our society becomes increasingly cashless, some advocacy groups have raised concerns about the inclusion of vulnerable groups in the digital economy. While these concerns are justified, and it is true that not enough is being done to include everyone in the digital economy yet, the solution should be a collaborative solution involving governments, regulators, financial services and fintech providers who all play an active role. , rather than a rejection of the concept of cashlessness.

“For a cashless society to be truly successful, digital payments must be available and appeal to everyone.”

The challenge of eradicating cash

So even though technology is innovating at a rate of distortion, making digital payments faster and more efficient than ever before, it is the restraint of consumers on the ground that makes it impractical to go completely cashless at the moment.

Mueller says: “Consumers still see cash as an important part of the payment landscape, with research showing that 28% of customers would not consider shopping in a store that does not offer cash payment. Not only would a cashless society require a complete economic overhaul to ensure that significant sections of the population were not left behind, but it would also require a significant change in consumer attitudes – even for those with access to other payment methods. “

He points out that eCash is a solution with the capacity to bridge the gap. eCash offers a barcode-based cash-in / cash-out infrastructure that uses existing retail locations such as supermarkets or kiosks – locations well integrated into consumers’ daily lives and routines – and offers a lifeline to cash-dependent consumers in a digital economy.

“People with low to middle incomes, who are often particularly dependent on cash as part of their income (eg taxi drivers, hospitality staff, teenagers who receive pocket money, owners of SMEs such as cafes and bars), need an easy and cheap way. to digitize their cash to make digital financial transactions and pay for products and services online, says Mueller.

And it’s not just about whether a cashless world can be achieved or not, it’s also about listening to what customers want.

“We believe that when it comes to payments, the choice is crucial and access to cash – as well as consumers’ right to continue to pay in cash – should be protected.

The pandemic certainly opened up the payment landscape, but only 10% of consumers said they would plan to be completely cashless over the next few years, which was only a 1% increase over pre-COVID figures, and 50% of consumers plan to make at least 25% of their cash transactions in the future. “

He concludes: “Cash continues to play an important role in society, especially when it comes to financial inclusion. At present, industry figures show that 1.5 million adults in the UK are without a bank and 2.2 million are dependent on cash for daily expenses. “

Top 6 countries in the process of becoming cashless

• # 6 UK
• # 5 Finland
• # 4Netherlands
• # 3 Norway
• # 2 China
• # 1 Sweden

Leading contactless payment methods

• Credit / debit cards
• Mobile payments
• Cryptocurrency