It’s no surprise that digital payments have surged excessively in recent years. Ten years ago 65% of the transactions made worldwide were in cash. Now the numbers have come down to 32%. Just in another decade it could be as low as 5-10%. Technological advancement, high level of security and accessibility are the primary reasons due to which consumers opt for digital payments. The sudden escalation in the use of digital payments, which includes traditional debit cards and credit cards as well as mobile payments have contributed to the steady shift in payment practices among consumers. Business owners who recognize this trend have opted to go entirely cashless, creating a safer work environment eradicating the risk of embezzlement.
But does this mean that we are on the verge of cashless
Well yes, I believe that after a decade or two our society will turn cashless. The following reports must be taken into consideration before confirming the aforementioned statement. Firstly, today 46% of the consumers use digital payment methods for small purchases (>20$). Earlier the aggregate was 22%. This behavioral shift can be partially attributed to the aggressive marketing schemes implemented by credit card companies. Earlier credit cards were used only for emergency purchases in our society. Secondly, this trend is not limited only to metropolitan areas. The difference between the use of digital payments in rural areas and urban areas is marginal. Smart Mobile Technology is a major source of influence in this case. As smart mobile penetration and digital payments expand, so will cashless capabilities. Third, for some business owners, a cashless business model is a strategic choice that provides numerous advantages. The reasons why digital payments are better than cash payments are stated below- Digital Payments are safer Digital Payments can be tracked. One of the biggest benefits of this is that it will significantly reduce crime rates. Cash Transactions play an important role in facilitating crime as it is untraceable. The use of cash means for payments will help reduce tax fraud, cash, and money laundering. Digital Payments are Smarter For many under-serviced, rural and socially and economically backward communities, having access to large consumption data is a huge benefit. Just in one glance, users can easily view their spending routines, categorized between food, travel, health products, entertainment, business purposes, etc. Apps such as mint can also provide saving goals and automatically take a percentage of money and save it in a secondary account. Thus I believe that we are on the verge of a cashless society. According to me, the tipping point will come sooner as the young tech-savvy generations continue to integrate themselves with this new mode of payment. In conclusion, I would say that coupled with concerted efforts to build bridges across the banking and digital divides, will enable us to shit towards a cashless society.