During the past two decades, the financial services sector has undergone some dramatic changes. For instance, while were once the territory of high street banks, there are now many online lenders enabling you to borrow money from the comfort of your sofa.
But with more and more people turning to cards and, increasingly, mobile payments, to pay for goods and services, could we be on the brink of saying goodbye to cash for good? CashLady investigates the truth behind the claims that the future could be cashless.
Electronic Payments Make Going Cashless Easier
One of the main reasons why some people believe the days of cash are numbered is how easy it is to move money electronically. Today, we can open up an app and set up bank transfers, pay our bills and send our friends and family the money we owe them with a few clicks. No need to move from your sofa or even leave the house.
You can pay for everything from a bottle of whiskey from a retailer in Scotland, to a week’s villa rental from the owner based in France or Spain, all from your smartphone.
What’s more, you can do this instantly. Once you may have paid your bills by cheque, either through the post or in person. Instead of it taking a few days, now the money can leave your account and hit the payee’s account immediately.
Even if you are physically in a shop, you don’t have to worry about taking out cash to pay for your groceries. You could use a mobile payment system, such as Apple Pay, to pay for your weekly shop. And there is no need to worry about your pockets being weighed down by all that loose change, either.
But Cash Is Still Extremely Important
On the other hand, the BoE also says that in 2017, debit cards actually overtook cash as the most-used payment method in Britain.
However, it concludes that cash is “unlikely” to die out at any point in the near future. Indeed, some might say it has shown its faith in cash’s future by rolling out new polymer bank notes.
Cash Is Largely Untraceable
Up until now, technology has not been able to replicate two of cash’s main selling points: it cannot easily be traced, and it is reliable.
If the power goes off in a shop, and you can’t use your debit card, you can still pay with cash. If you want to buy something that you don’t want to be traced back to you, you can do this with cash.
Pros and Cons of a Cashless Society
Like any situation, there are advantages of pitfalls of society that is cashless.
For example, experiments have shown that reducing cash liquidity is linked to a drop in illegal activities. This is largely due to every transaction being tracked and recorded, which in turn provides less room for any suspicious activity.
Banks also support the move to going cashless because it costs them more to make coins for circulation. It’s also much riskier to carry large amounts of cash around, making you a prime target for theft.
On the other hand, the change can have the result of leaving the vulnerable and elderly behind. Newer technologies are difficult for older generations to grasp. They may not feel comfortable putting their trust in a system they do not understand.
When it comes to business, some are reluctant to switch to a cashless system because they fear to lose loyal customers. These customers may not be able to access the banking system or have no wish to shop without cash.
While there is no doubt that many of us are choosing to pay using methods that don’t involve us having to carry notes and coins around, cash is still an extremely important payment method and offers us advantages that technology can’t, at the moment, replicate. It seems that, at least for the time being, cash may not be going anywhere.