2020: The Year of Maturity of the Cashless Society

Cash has always been king. However, its reign might not last for long, and 2020 might be its last year on the throne. The world has slowly been moving towards digital money, with various countries around the globe, making active efforts to completely do away with cash in circulation. Take Sweden, for instance. As of 2018, only 13% of its population reported using cash for a recent purchase, down from 40% back in 2010. At the time, 70% of people living in the United States reported using cash every week. Still, the United States, and other countries, including developing nations, are following Sweden’s template, working towards a cashless society, a society defined by digital money.

Future Projections for Non-Cash Transactions

Projections show that by 2022, Asia will get to increase its non-cash transaction to 350 billion dollars. Europe is expected to outperform current North-American numbers of $106.6 billion non-cash transactions as well, a move that shows the world’s commitment towards having a cashless society. There are lots of factors to be considered, such as the non-cash payment methods, security and efficiency. Currently, credit and debit cards, direct debit and credit transfers dominate such payments. However, fintech firms are continually pushing the envelope, developing various mobile alternatives, even though they primarily depend on the methods that already exist. Take PayPal, for instance. It might be an online non-cash payment service, but it accepts both bank transfers and credit cards. Virtual wallets such as Google Wallet, Samsung Pay, and Apple Pay function by simply tokenizing existing credit cards, allowing for more secure transfers. Regardless if the world is moving in the right direction, it is only a matter of time before this will be achieved.

2020 and the pandemic

So far, just five months into 2020 and the whole world has come to a standstill. Covid-19 has been responsible for over 4 million confirmed cases globally (at the time of writing this article) and 270,000 deaths as well. The pandemic has brought everything to a grinding halt. Businesses have stalled, inter-continental flights are limited, and the future, as of right now, looks bleak, especially for businesses. But is it though? It can be argued that this is the best time for companies to re-strategize, to acknowledge the challenges that exist now and will exist in the future, devising new ways through which they can still make money. One inevitable result is that handling cash may be frowned upon in the future. As it already stands, cash payments have been flagged as a potential transmission medium for the virus. This fact acknowledged by the World Health Organization; has created the perfect argument for cashless payments.

Non-Cash Transactions Incentives

Already, developments are happening to speed up the shift towards digital payments. In developing nations such as Kenya, the proliferation of the mobile payment service M-Pesa has been facilitated by the waivers on transaction fees. Policies that did not exist before have been set up to encourage cashless transactions and digital money transfers. Even once the pandemic is done, some of these policies will stay in place, and more people will have hopped on the digital payments bandwagon, with no desire to go back to cash payments.

With the pandemic and everyone staying at home, online shopping has skyrocketed. Businesses such as Amazon, Instacart, and PayPal have all seen a significant increase in demand. Cashless payments are increasing. On top of that, the pandemic has also boosted online purchases of simple items such as groceries, again followed by cashless payments. Customer behaviour is slowly changing, and businesses are changing with it. Companies that handle payments are continuing to innovate during this time, not only to make cashless payments more secure, but also safer (through tokenization), and incentives to make people use them even more.

Conclusion

2020 is the year of the cashless society. There is no doubt about it. The Corona Pandemic might not have an end in sight as of yet, but even after it over, the foundations that will have been laid would not allow society to go back to the regular cash payments. Cash was king; it is no longer king. There is a new king, and this one is here to stay. Cashless payments are here to stay, and the future will look back at 2020 as the period when the last nail in the coffin for cash payments was set.