Cashless society (2024)

FAQs

Cashless society? ›

In a cashless society, financial transactions are not conducted with physical banknotes or coins, but instead with digital information (usually an electronic representation of money).

The US is moving toward cashless payments, with a substantial increase in the use of mobile wallet apps and contactless cards. A report from the Federal Reserve Bank of San Francisco found that payments made using cash accounted for just 18% of all US payments in 2022.

Norways is the most cashless country, with only around 2% of payments being made by cash, and 100% of the population having a bank account.

Physical currency isn't becoming obsolete any time soon, so it's important to weigh up your options before deciding to go fully cashless in 2024. Ensuring you can accept some cashless payments though, is essential to keeping with today's trends and customer expectations.

The downsides of going cashless include less privacy, greater exposure to hacking, technological dependency, magnifying economic inequality, and more. Credit and debit cards, electronic payment apps, mobile payment services, and virtual currencies in use today could pave the way to a fully cashless society.

Analysis from Barclays Investment Bank, meanwhile, predicts that the global transition from cash to digital payments would reach a tipping point moment in 2025, when absolute cash usage would decline from 41 per cent in 2019 to 20 per cent by 2030.

But there are potential drawbacks to a cashless society. First, it would largely exclude “unbanked” (mostly poor) persons, who do not use or cannot obtain a bank account. Second, it could invite serious breaches of privacy, because few purchases and sales would be anonymous.

France Is the Most Anti-Cashless Country in the World

More and more people in France are also choosing to withdraw cash from their bank accounts and keep it at home.

Why Eliminate Cash? Cash can be used in criminal activities such as money laundering and tax evasion because it is difficult to trace. Digital transactions or electronic money create an audit trail for law enforcement and financial institutions and can aid governments in economic policymaking.

And in 2023, Sweden proudly became the first cashless nation in the world, with an economy that goes 100 percent digital. About 80 percent of Swedes use cards, with 58 percent of payments made by card and only six percent made in cash, according to the Swedish Central Bank.

Should we get rid of cash? ›

For instance, using cash instead of credit or debit cards may help keep some people from overspending, because you can see how little is left in your wallet after every purchase. In short, getting rid of cash would impose hardships on society's most vulnerable people and could jeopardize our 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.

As people move toward more electronic or digital forms of payment, it might seem like paper money is on its way toward obsolescence. But experts say that cash will always be around.

“China is one of the top countries for using cashless payment systems, but penetration is not 100%,” says Sara Hsu, an associate professor at the University of Tennessee, specialising in supply chain management. “Elderly Chinese still often prefer to pay with cash and some struggle with using mobile payments.”

Making cash payments is time-consuming for customers as well as businesses. With cashless payments, customers can simply swipe their cards, enter a PIN, or use a mobile payment app to complete a transaction. Businesses can receive funds in their account much faster by eliminating the long payment processes.

Crucially, this substitution has significant consequences for social inequality: while people with higher incomes typically benefit from cashless payments through easy and frictionless payments and access to short-term credit, people with lower incomes become increasingly dependent on financial services for which they ...

U.S. President Joe Biden ordered officials to look into a digital dollar in 2022 but it has become a divisive political issue with Biden's Republican rival in this year's U.S. election race, Donald Trump, vowing not to allow it.

Will a U.S. CBDC replace cash or paper currency? The Federal Reserve is committed to ensuring the continued safety and availability of cash and is considering a CBDC as a means to expand safe payment options, not to reduce or replace them.

Why Eliminate Cash? Cash can be used in criminal activities such as money laundering and tax evasion because it is difficult to trace. Digital transactions or electronic money create an audit trail for law enforcement and financial institutions and can aid governments in economic policymaking.

Is India Ready for a Cashless Economy? The government's initiatives have contributed to equipping people to leverage several fintech solutions over the years. But although India has achieved significant progress towards going completely digital, we still have a long way to go.