From the beginning of time, everything has been changing, including the way we travel, the way we speak, the way we learn, the way we shop, and more importantly the way we pay.
During the early stages of internet development, it was primarily used for sharing information. Users could access documents and files from anywhere connected via dial-up internet connections using a landline phone.
This era was called Web 1.0, which, according to Tim Berners-Lee, is the ‘read-only web’.
Then came Web 2.0, the ‘read-write web’ as Tim Berners-Lee described it. Almost overnight, the web’s landscape drastically changed. This gave rise to digital money. As liquid cash transformed into digital money, a cashless society became possible.
Now, Web 3.0, which is ‘read-write-execute’ according to Tim Berners-Lee. Although it is still evolving, the idea behind formatting data so that software agents can understand it leads to the ‘execute’ aspect of Web 3.0.
Though the trend towards a cashless society has been accelerating since the world entered the 21st century, developed nations have been leading the way. They possess the infrastructure and technology for such an advancement. However, the main challenge is for least-developed nations, since they lack the technology and even the resources, but COVID-19 changed everything.
What is a cashless society?
A cashless society is an economic state that doesn’t use banknotes or coins anymore. You can trade everything digitally with credit and debit cards or electronic funds transferable from your mobile phones or computers.
During the ongoing COVID-19 pandemic, which spread from person to person, this was the best technique. For this reason, people started using cashless services heavily.
Development nations have made big gains in this adoption; Indians have been using the government’s Unified Payment Gateway (UPI) platform and have transacted over $100 billion in October 2021, compared to less than $1 million in October 2016. In second place is China, which also uses online payment gateways.
However, there are many digital payment options out there, like PayTM, PayPal, Google Pay, Apple Pay, prepaid cards, online money transfers, and gift cards.
Advantages of a cashless society?
We will examine the advantages of shifting to a cashless society and its possible benefits to individuals, businesses, and institutions.
Instantaneous transactions are made. People have more time to do other things.
Most of the time, you waste time at a convenience store or gas station waiting for your change, and sometimes, they don’t have it, so you have to wait until they get it, which further wastes your time.
By going cashless, you just scan a code and pay the exact amount by using your phone or card.
You can order online and pay them in advance, you get your delivery without you leaving your home and that also saves your time and fuel, if you physically do this activity.
Better financial management
Having your bank account linked with a digital wallet gives users access to their financial inputs and outputs history, besides their current sold. That offers a better view of their spending habits.
You get all the transaction details in your bank passbook (ledger), so you can cross check your spendings, which helps you manage your finances.
Imagine being robbed in broad daylight, going to the police station to file a complaint, and if you are lucky, you will get your money back, but no one knows when.
But, if you move cashless, and you lose your cards or phone, a single call to the bank will help you block the accounts.
Now, every online purchase has a one-time password (OTP) option. This gives added security to your digital payment option. You have the evidence that you paid, alongside the exact time of payment.
One of the most significant disadvantages of paying with cash is that the transaction’s success depends on the cash register.
Most of the time, we have to lend additional money to the vendor because he doesn’t have an exact change. And if we think about it, every penny left matters.
As per an estimate over $20 billion is lying as unclaimed deposits/amounts with various Indian banks and insurance companies as of December 2020.
There are over hundreds of countries, this is just one.
If all these people have access to your accounts on their mobile phones, this would have not been the case.
Clean digital money
For years, money has been moving continuously from hand to hand. In most cases, unless you live in Japan, you own old dirty cash. Due to the Coronavirus threat, people have switched over to using digital wallets. This is not limited to COVID-19. There are many other diseases that can be contracted from touching old paper money, including Hepatitis A.
Challenges of a cashless society?
Even though there are various advantages, there are some challenges that a person has to face in a cashless society.
In the event that you lose access to any electronic cards, online access, or digital IDs with which you make payments, you will need to immediately contact your bank or financial institution to block the cards or to regain access. Getting your assets back will take time.
In a cashless society, borrowing money is another challenge. If you require money immediately, your friend will be unable to lend it to you. Unless they can lend you money from their own card or wallet account (which is too risky) or buy you a gift card.
As another example, suppose you have lost your credit card and your phone battery has run out. How will you travel? Additionally, you could leave your card at home or run out of battery on your smartphone. You would not be able to borrow money from anyone nearby.
Are there cashless countries?
No, there is not a single country that can be 100% cashless, but some are on the way to becoming one.
Over 87% of Swedes use only digital payments, making it the first cashless country in Europe. Sweden has assured the world that it plans to go cashless by 2023. Cashless payments are not just a trend in Sweden. Over 78% of payments in Finland were made with debit or credit cards in 2018.
China implemented a technology that eliminates the need for cash and credit cards with facial recognition in 2019. Over 95% of people in South Korea own a smartphone, and most of them prefer to use it as a funds transfer instrument and in Australia, there were recorded less than 20% cash payments in 2019.
Is crypto a solution?
Yes, on a general level, crypto gives a solution to all the fiat cashless economy’s flaws. Since all the data is encrypted, all accounts are very secure, making hacking extremely difficult (and expensive), as we described in our article about blockchain security.
Additionally, this encryption system ensures you have complete data privacy, so no one knows who you are or where you are. Moreover, your assets are the only ones assigned to you, so you are the only one responsible for them. Besides autonomy, security, and anonymity, Bitcoin and altcoins offer all the benefits of a cashless society.
Adopting crypto to become 100% cashless is a Klever idea.