The use of cash has been steadily declining across the world for years – spurred on by the rise of digital challengers making payments ever-more convenient, and consumers demanding faster, more seamless ways to pay. The coronavirus pandemic has only hurried things along.
Suddenly, we’ve been forced to move away from cash and towards more digital forms of payment and cards – whether we like it or not. It leaves us wondering… is the end of cash nigh? Is a totally cashless society just around the corner? We asked our CEO, Igal Rotem, what he thinks.
Why so bold?
The cashless model isn’t some theoretical, fantastical forecast. It is already nearly established in select regions across the globe. Take China, for instance. Despite having such a massive economy (even during the current coronavirus pandemic), this enormous country is unbelievably close to being a completely cashless society. Why? Well, for the most part, due to the country’s three most popular mobile phone applications: WeChat Pay, Alipay, and UnionPay.
Opening up a world of convenient, instant and direct payments, these apps enable Chinese consumers to make most of their purchases through their smartphones. In fact, a Chinese shopaholic may have 100 Chinese Yuan in their back pocket, yet not spend it for weeks or months, favouring the phone they keep in their front pocket.
As well as China, Sweden has also been ahead of this trend for a long time now, introducing a wealth of cash-free spaces across the country.
So, what are the benefits of moving away from cash?
The fact is, the move towards a cashless society in both China and Sweden is being actively supported by their respective governments and central banks, mainly because it is extremely cost effective. Going cashless saves a lot of friction, reduces illegal black economy activity, and decreases tax evasion.
It’s also attractive because it provides a greater oversight of economic activity and the economic environment, and therefore a greater level of control, which in turn leads to a reduction in crime.
Now other governments are waking up to the value of reducing cash use, and I believe we’ll soon see these cashless societies replicated right across the world
Of course, this will take time to implement. However, the coronavirus pandemic has undeniably sped up that shift towards digital and contactless payments.
How and when will the world abandon cash?
Well, one thing holding back online payments from becoming the be-all and end-all for transactions is the shoppers who aren’t digital natives and may feel alienated by this change. And that’s why the simplification of digital payments is crucial.
When it comes down to it, the rise of one-click checkouts, contactless, and the integration of payment methods into everyday devices means payments are becoming a lot more user friendly.
If we continue down this route of taking all the complexity out of digital payments, the switch from cash will become a much more viable option for consumers across the world – no matter how acquainted they are with technology
And let’s also not forget that consumers are now demanding a move towards environmentalism wherever possible. Some challenger banks are already producing their own environmentally-friendly debit and credit cards.
Does this mean we’ll stop using cards altogether?
Well, the use of plastic cards is certainly likely to drop as a result. To add to this, the rise of blockchain and alternative payment methods, combined with the likes of PSD2 and SEPA direct debits, is only serving to push society further away from the use of cash and traditional payment methods towards a cashless society.
However, it’s important to be realistic here. Cash transactions are still necessary for many global citizens, and will continue to be so for some time. But, going cashless has been proven both possible and more economical by these trailblazing regions.
All the benefits that a cashless world presents make it an eventual inevitability – it’s just going to take time to get there.
And Credorax is entirely behind that journey, supporting more than 120 alternative payment methods on a global scale, and doing our bit to make sure that this process is as smooth as possible, whatever the region, currency or payment method.
How will merchants and service providers cope with the transition?
As I see it, our job is to make sure no one is left behind when payment methods evolve. So, our next generation of technology-driven banking solutions are here to get our eCommerce merchant and payment service provider partners fully equipped to adapt to a cashless world.
Are you ready for a cashless society? To learn more about how Credorax can help you embrace digital payment methods and say goodbye to the faff of cash, contact us at: firstname.lastname@example.org.