The future is here. Ten years ago, if you had the bravery to claim that “cash will soon be worthless”, you’d have been laughed out of the room, whereas now it seems to be a very real possibility. But, before you dust off that anarcho-economics book that you bought to impress your friends in university – we aren’t witnessing the end of money, simply the decline of physical cash.
We’ve seen nothing short of a collapse in the usage of physical cash in the last decade – so much so, that the recent Access to Cash Review asserted that the entire cash system was at significant risk of “falling apart”. In 2007, roughly sixty-one percent of all payments were made using cash, but by 2017, this number had plunged to just thirty-four percent. Debit cards overtook cash as the utilised method of payment for the first time in June 2018, and forecasts suggest that cash could be used in as few as one in ten transactions fifteen years from now.
If you’re like me, then you’ve clearly focused on the big questions – for example, will Scrooge McDuck have to fill his vault with AMEX black cards? But if you aren’t, then you wouldn’t be alone in wondering what effect a move towards being cashless might have on society.
Why businesses and consumers are choosing to go cashless
Fun fact, the UK’s first credit card – the Barclaycard – was launched in 1966, and by 1972, all the UK’s major retail banks had followed suit. So, considering that cashless methods of payment aren’t a new phenomenon, why are we only just waking up to their benefits?
The development of technology plays into this greatly. The development and subsequent uptake of contactless technology has made it incredibly efficient to use cards for payments. Furthermore, with the vast majority of us now carrying a contactless-enabled device linked to our bank account – smartphones, smartwatches, wearable technology – we now don’t even need our cards to pay!
It’s the same story for vendors too – with the improvement in broadband infrastructure now meaning that it’s viable to process cashless transactions on a large scale.
The argument for going cashless
Going cashless could lead to a reduction in certain forms of crime. Cash plays a huge role in the facilitation of crime, due to the associated difficulty of tracing its origins. Cashless transactions are easily tracked, and this makes it much more difficult to both launder money, or avoid tax. In Sweden, where eighty-one percent of transactions are made digitally, VAT receipts have increased by thirty percent. Through going cashless, businesses and consumers drastically reduce their chances of being mugged or burgled.
Cashless money is also easier to store. It’s incredibly easy to shut down a digital wallet if stolen, and access to your money is unaffected by your physical location. Electronic money is also near impossible to lose or damage and isn’t plagued by the hygiene issues suffered by paper money. Commercial organisations also save, as they are no longer required to pay for the protection or transport of physical cash.
Finally, digital money is much easier to carry around – whether you have £1 or £1 million in your account, it takes up no more space in your pocket than the size of the card itself – something which isn’t true when carrying physical money.
Cons of dropping cash
The Access to Cash Review revealed that seventeen percent of people believed that they would struggle to cope without cash – when extrapolated to the nation, this leaves eight million people in difficulty.
Making up this seventeen percent are a number of vulnerable groups; elderly people – who may not have the technological know-how to adapt to cashless transactions, those struggling with debt – for who cash is much easier to manage, those in rural communities – for whom poor broadband and mobile connectivity makes cashless transactions highly inefficient, and the homeless – for whom opening a bank account would be impossible, as they lack fixed premises.
Cashless transactions are also reliant upon digital infrastructure. If for whatever reason this infrastructure fails – as happened last year to both the Visa and Mastercard networks – users will be left without access to their money, something which is very unlikely to happen with physical cash.
What we need to see for a truly cashless society
Whilst the affluent and technologically enabled may already be living a cashless society, any move away from the usage of cash would isolate and marginalise vulnerable members of our society. This is as unfortunately, we still haven’t solved the issue of providing access.
We need to rethink what is truly a ‘necessity’ society. Access to basic financial products should be considered as a right, rather than a privilege. While we may need legislative action to truly change this, there are a number of exciting companies out there extending the benefits of cashless finance to those who need it most.
Leaders in the space
Pockit – Pockit was founded with the aim of bringing financial products to the UK’s unbanked population. A Pockit account offers all the services of a traditional current account, without any of the issues related to inaccessibility. Anyone can open a Pockit account within 2 minutes, and they receive a contactless card and access to the Pockit app.
PiPiT – PiPiT allows expats to pay for bills and services in their home country from their host country. Not only does this provide a cheaper option – cash transfer fees can be up to 12% in some cases – it also provides a peace of mind that the money remitted will arrive where intended.
Monese – Britain’s first mobile bank, Monese allows users to open an account in under three minutes, without needing a UK address – enabling immigrants and expats, who may find it difficult otherwise to open a bank account, to access banking services
WorldRemit – WorldRemit was founded due to a dissatisfaction with the pre-existing money transfer services. WorldRemit’s mobile app allows users to send money to a mobile money account, bank account, cash collection point, or enjoy mobile airtime anywhere in the world.
Curve – Curve lets you connect all of your bank cards into a single Curve card (and adjoining app) – turning your mobile phone into a complete financial control centre. Curve also allows its users to make purchases and withdraw money whilst abroad with 0% foreign exchange fees.
Are you interested in hearing about how we might be able to help you promote your offering? Speak to a member of our award-winning technology team today.