The future of the financial sector appears to be pretty clear, it is cashless!! This is because, in the past 2 years, we have witnessed a surge in the number of digital payment solutions offering cashless transactions. And this appears to be the new norm as investors and central banks all over the world set their sights on exploring this new technology.
What is accelerating the transition to a cashless society??
The rapid transition to a cashless society has in the past two years been greatly accelerated by the impact of the Covid-19 pandemic. This is because the mandatory lockdown and restrictions which followed the emergence of the virus caused massive disruption in the financial sector. Although many might argue that the financial sector was already undergoing transition, which of course is true. However, the need to reduce physical contact during the period of the pandemic paved the way for alternative methods of payment that would require little or no contact, and this led many to adopt cashless transactions, including online payments and use of contactless card machines. This transition helped companies like PayPal, who saw an increase in their users from 305 million to 377 million in just one year (2019-2020).
Similarly, many companies offering digital payment solutions experienced a drastic increase in revenue from digital payment. Western Union, for example, had a 38% leap in its digital payment revenue in 2020.
Central bank Drive
The central banks of countries all around the world have been spearheading the rapid adoption of cashless transactions. This is because the successful emergency of cryptocurrencies has triggered a new wave of payment platforms designed by central banks to offer similar digital payment solutions. Countries like the US and China are in a race against time to deploy their form of digital asset and will offer cashless transaction services and compete with these crypto tokens. Currently, China is testing its own virtual Yuan which was deployed successfully at the just concluded Winter Olympics in China. While in the US, there are talks about the creation of the virtual dollar also the European Union and Great Britain are also considering launching their virtual asset which will offer similar solutions. Other countries on the verge of launching their virtual asset include Sweden, Iran, Venezuela, and a host of others.
What You Need to Know About Cashless Society
The reality of a cashless society is here, but what benefits do they offer? And what are their disadvantages??
The Merit of a Cashless Society
It is cheap for companies
A cashless society will benefit retail companies, and banks that deal in cash transit. This is because it is usually very costly to transit this cash. With digital solutions, it becomes so easy to move large sums of money at little or no cost.
It Is eco-friendly
Cashless transactions would promote sustainability since little or no materials would be needed.
Ease of business
On an individual level, a cashless society would help to improve business transactions. This is because reduces the need for physical cash which sometimes may be a barrier to business.
With Cashless transactions comes increased accountability with spending. It offers a solid means of tracking transactions.
The Demerit of a Cashless Society
Cashless transactions may be susceptible to cyber fraud like hacking leading to insecurity.
Our world is dynamic and things are changing pretty fast. Going by this pace, it is safe to say that shortly, the number of cashless transactions may increase by at least 2 folds across the globe as more and more countries open up to this technology. This is a thing of joy because it has more advantages than disadvantages.