It is a rare thing to see someone pay with cash at a grocery store. This had been the case way before the pandemic and the increased popularity of contactless payments. Soon, even taxi drivers in small towns will be expected to accept credit cards. At this point, a cashless society is inevitable, and business owners and the general public need to be prepared for it.
What a Cashless Society Implies?
This emerging phenomenon is self-explanatory. As the name suggests, a cashless society is one where no or almost no transactions are happening in cash. Instead, people are using credit and debit cards, smartphones, mobile wallets, and other digital payment methods. A cashless society is not yet fully developed, and the popularity of cash depends on the part of the world. Generally, the more developed a country is, the more common digital payments are there.
However, it is now evident that a cashless society is our future. Even traditionally cash-dependent industries, such as casinos, are going digital. Casino games and slots to play online are obviously cashless, while land-based casinos are adopting IGT’s cashless solution. According to a study conducted by the U.K. Finance, only 34 percent of payments in the U.K. are now made in cash. This number will continue to grow in the upcoming years, and it is possible that a completely cashless society will become a reality in the next decade or so, at least in developed countries.
Benefits of a Cashless Society
Decreased prevalence of tax evasion and other frauds, including money laundering. Unlike cash, digital payments always leave a trail, which means it is going to be almost impossible to sweep any transaction under the carpet.
Not carrying cash around is safer. Remember how stressful it was to walk around with a wallet full of cash back in the day? Today, pickpockets are way less lucky because hardly anyone has more than a couple of bills on them. Paying digitally means decreasing the risk of being mugged.
The convenience of customer data collection. Thanks to digital payments, businesses can analyze their customers’ purchases to detect patterns and consumer trends. Despite privacy concerns, this supports more targeted marketing and overall service optimization.
Digital payments are contactless. Touching cash has never been a problem until 2020, but it is now. Most businesses are avoiding cash as part of the pandemic-related safety restrictions. The lesser the contact between people in public places, the better it is for virus containment.
Pitfalls of a Cashless Society
Privacy and data security. Digital transactions are recorded, which makes privacy violations very likely. Cases similar to the notorious Equifax data breach will probably happen repeatedly until researchers come up with effective privacy protection mechanisms.
Inclusivity. A cashless society is easy to navigate for the youth, but many older people are not comfortable with digital payments. The older generation had lived with nothing but cash for decades, and they may struggle with adjusting to the technology-dependent lifestyle humanity is moving toward. It is primarily business owners and tech giants’ responsibility to make the transition as seamless as possible.
Also, the digital divide is still a thing. Many people with lower socioeconomic status do not have bank accounts and access to the Internet or mobile banking. A cashless society makes things more difficult for them.
“Technical issues” of all kinds. Mundane yet unpredictable problems akin to power outages can cause major inconveniences in a cashless society.
So, What Should Businesses Do for Now?
The evolution of a cashless society is a gradual process; no one expects every business to abandon cash at once. However, business owners need to realize that most customers expect digital payments to be available. It is not uncommon to see a customer get frustrated when a store employee says only cash is accepted. This trend will become even more pronounced going forward. Regardless of how cash-dependent a business used to be, owners need to figure out how to make cashless payments available to avoid losing clients.