Carrying cash is inefficient, limiting, and vulnerable to theft. That’s why the use of cash is slowly declining, and buyers are shifting toward digital payment methods as a more secure alternative. When physical cash is removed from the picture, consumers do not have to worry about having enough cash with them to make a purchase, and businesses broaden their customer base by appealing to those who prefer digital payment methods.
But at the moment, it’s unlikely that the world will be cashless anytime soon. An entirely cashless society would be detrimental to the millions of people who lack smartphones for payment apps, bank accounts for credit/debit cards, or are dependent in some way on physical currency. In addition, it would be in a business’s best interest to continue accepting cash, as one among a wide variety of payment methods. Going cashless, however, does have its advantages for both businesses and consumers when it comes to paying for goods and services–let’s take a closer look.
Cash is vulnerable to physical theft, and It’s easy to misplace cash or fail to predict the proper amount you will need. On the other hand, digital payments are much more difficult to steal, especially if an online payment processor utilizes fraud detection capabilities. Online processors must also verify a buyer’s identity and double check that their account has sufficient funds before authorizing a transaction. These online payment processor features help prevent accounts from getting overdrawn and deters identity theft.
The use of digital payment methods is also likely to reduce the amount of money being mismanaged internally. Transaction records from electronic payments are easier to follow, which decreases the internal risk associated with money management, such as theft. In comparison, unmarked cash provides a bigger opportunity for theft or just general human error.
Similarly, the easy tracking of digital payment methods can help with budgeting. The CEO of Outlook Asia Capital, Manoj Nagpal, says:
“If all transactions are on record, it will be very easy for people to keep track of their spending. It will also help while filing income tax returns and, in the case of scrutiny, people will find it easy to explain their spends.”
People would not need to manually balance checkbooks if all of their account information is available in a mobile app that records their purchases and deposits. Such records can also serve as proof of transactions in case there is doubt between a merchant and a customer.
One of the most significant benefits of cashless payment methods is convenience. Instead of having to carry physical cash everywhere, people can use their credit or debit card or store that information in a mobile wallet. If your business only accepts cash, customers might see something in your store that they want to buy but could not because they didn’t have enough cash on hand. Alternatively, if you accepted cashless payment methods, customers would easily be able to also purchase products via their mobile phone or card. In addition, the amount of time spent in lines or at check out would be reduced because cashiers would not need to count and sort change.
From a business owner’s perspective, electronic payments are beneficial because it allows their company to purchase equipment and supplies with ease. Instead of writing a paper check and hoping it doesn’t get lost in the mail, recent innovations to online payments systems now allow businesses to process large sums of money with enhanced security. Features like electronic invoicing also make it possible for companies to collect payments without using snail-mail, and more efficiently manage their accounting processes.
Some countries are shifting towards a cashless society, but none are 100% cashless. Besides Australia, where the Sydney Morning Herald reported that ATM withdrawals in Australia had reached a 15-year low because many people were opting for digital payment method instead, other countries have not mass adopted digital payment methods. But they are quickly getting there. Many shops in Sweden now say “no cash accepted,” and 98% of all transactions are made with electronic methods. Similarly, only 34% of purchases made in the UK are paid with cash, and debit cards are the preferred payment method.
Though many countries seem to be moving towards a cashless society, UK organization Access to Cash, warns against “sleepwalking” into a cashless society. While digital payment methods are advantageous for many consumers and businesses, the poor and the elderly would be negatively impacted. Individuals and families that lack access to banking services, smartphones, the internet, and other digital payment devices will be left behind and unable to participate in a cashless society. The state of New Jersey is even considering enacting laws intended to prevent stores from only accepting cards. A cashless society has its benefits, but it is important not to make it a reality before everyone is ready for it.
Only accepting cash puts businesses at a severe disadvantage. Many consumers expect digital payment options to be available and may not be able to complete purchases without them. And by using payment platforms like our product CurrencyPay, companies can accept business from a much broader audience and accommodate the different payment preferences of customers around the globe.