Although money, in its physical form, has been around for centuries, according to global trends, it does seem like we are heading towards an empty wallet world - literally. If you haven’t noticed already, you probably use your mobile pay apps or cards more frequently to pay for stuff that you do cash.
Also, there are some countries like Sweden and South Korea that have been foregoing cash at an increasing rate over the last few years. Experts believe that it is only a matter of time before such countries are entirely cashless. Still, going cashless is a contentious topic.
What is the major cause of the world going cashless?
According to various reports, financial technology, popularly known as Fintech, is the driving force behind this trend. To be specific, the major actor advancing this cashless shift is the dominance of mobile devices. Before, these devices were solely used to make calls. But thanks to the advances in financial technology, smartphones are now the centre of our personal and business finances. Today, smartphones are replacing cash and wallets for many.
There are also certain apps like Snapchat, Venmo, and Robinhood that are making money a social thing. These apps are taping into the prevalent millennial penchant for sharing.
What will happen if the world becomes cash free?
Seeing as a cashless world is the future, understanding the implications it will have on your personal finances or business is crucial. According to various business experts, many small businesses in 2017 did not handle physical currency. At this rate, it is highly likely that they never will. Just like landlines, physical maps and movie rental stores have become redundant, so will the physical dollar be cut?
Today, even businesses like vending machines and flea markets that have traditionally taken cash only are now adapting with the knowledge that resisting a transition to digital exchange will only hurt their business’s bottom line.
Major credit card service providers like Visa are tactically incentivizing small businesses across the globe in big ways to ditch physical cash in exchange for digital transactions. In due course, businesses that will remain resistant and fail to adapt to the cashless movement risk falling behind the competitors who will have optimized performance through financial technology
When will the world go cashless?
While it looks like the world will go cashless at some point, it is admittedly hard to determine when it will happen. Usually, major global shifts take time to fully manifest: This is no exception. However, as new technologies, platforms, and applications emerge, we keep getting an inch closer.
Here are some of the imminent challenges that may cause delays to the shift Infrastructure to support a cashless society, While the future of cash is quite clear, there is still a long way to go. For most countries across the globe, going cashless is a realistic option, but still, a costly one as they will need the right infrastructure to support a cashless economy.
Habit is second to nature
Changing a deep-rooted habit is not something that can easily be done. Handling paper money and handing it over to another person is a real experience that most people use for budgets and ensuring their spending habits are in check.
Although digital transactions are a relatively more transparent way of doing business since they are all tracked, not everyone regards this as a plus. Many people use cash specially for its anonymity. Some people are concerned that financial organizations and governments will get unwelcome insight into their spending habits.
Unlike cash transactions that materialize instantly, many digital transactions take up to 2 hours or longer to complete. For the world to go cashless, these challenges must be eliminated or at least mitigated.
The bottom line
The future direction of paper money is quite clear, established and inevitable. The positive impact created by the digitization of money is hard to ignore. That is why we highly recommend that you take the time to understand the gravity of this shift and respond to it accordingly to avoid a pronounced setback when the cashless society does materialize. Despite this digital money trend, physical cash is very much alive in most parts of the world. In fact, statistics show that approximately 85% of global transactions still happen in cash. Therefore, we still have a long way to go.