When was the last time you held a coin or bank note in your hand? Or more importantly when did you use cash to pay for a transaction?
While the eventual move to complete digitalisation of currency was inevitable, the Covid-19 pandemic has sped up this trajectory substantially. With the message about keeping our hands clean being drilled into us every day, not to mention that singing Happy Birthday has gained a whole new purpose, the want for using cash has dwindled.
In 2020 the amount of cash withdrawn from ATMs has fell by nearly 50% from £116 billion in 2019 to £81 billion in 2020. So why has the use of cash decreased?
The most standout reason is that transactions can be instantaneous. With one click of a button (or thumbprint) you can transfer money from one account to another. There is no clearing of cheques or waiting for the bank to process the cash. You can keep your finances up to date in a matter of seconds.
Small businesses such as pop-up stores can now use portal card readers to take money from customers. This gives the business the freedom not to obtain loose change from the bank, and therefore, selling products and calculating profit is made easier.
A paperless paper trail
There is also a digital paper trail, meaning every movement is accounted for, allowing a greater transparency of income and outgoings. While you could easily spend £20 of cash without being able to recall the specificities of where the money went.
Unlike carrying cash, if your wallet or purse gets lost or stolen, you can easily freeze your cards which lets you relax knowing that your finances won’t be spent without your consent, the complete opposite to stolen cash.
However, if your card has been compromised, given the digital paper trail, your bank’s fraud team can not only locate where the payment has been made but also restore any spent funds.
Can we be a cashless society?
While being cashless has its benefits, there are some instances that it wouldn’t be applicable. Certain companies or outlets that rely on cash as an income and while these aren’t necessarily businesses, these outlets are still part of functioning society.
For example, charities still use volunteers to collect cash from bystanders in exchange for small tokens such as flower pins and stickers. Given that portable card readers may incur a charge and the vast spread of volunteers the move to cashless simply isn’t an option for charities at the moment.
Risks of being cashless
One argument against digital currency is the control that larger organisations will have over the handling of the currency. Could individuals that trust in such banking society’s fall victim to technological issues that arise, resulting in the loss of accessing their finances when things go wrong? Or will this greater control by these corporations means that certain services many be restricted due to their overall governing of this cash?
While being completely cashless is but a future potential, in order for the concept to work successfully, there are other aspects that must be considered. These include but aren’t limited to, more stringent rules that govern international transactions as well as the subsequent infrastructures required to manage these deals.