Is a Cashless Society Possible?

The received wisdom of the 20^th century was that a cashless society was many years away, if not virtually impossible however the effects of the Covid crisis have rapidly advanced the chances of entire societies moving to a cashless model.

Proponents have in the past pointed to the many benefits of a cashless society; the speed, simplicity and helping with the fight against corruption all taking centre stage. Who could have predicted then that the biggest push in the last 100 years towards a cashless model would be a pandemic?

Nevertheless, using a way of paying for goods without having to handle dirty and potentially infectious currency is a strong driver for a move towards contactless payment methods and customers have fully accepted the need for cashless payment models.

Looking at the younger demographic we see that the older ways of using a physical card or cash to pay are rapidly being overtaken by device led payment methods.

We see younger people almost universally taking to payment using a phone app or phone banking and every smartphone on the market now has Near Field Communication (NFC) built-in.

With younger people adopting cashless methods so readily it is clear that there will be more and more developers looking to find other ways pay without using cash with rings, watches and even chips embedded under the skin all being posited.

What do we need for a cashless society?

There are a variety of things needed to move towards a cashless society, some structural and some political.

Naturally, the first thing needed is a well developed and accepted banking system. A cashless society is not a reality unless the population all has a bank account of some description and access to banking with contactless cards is a must.

Technology has to be in place in all areas of a country to make cashless payment a functioning reality. Sellers need to have access to payment systems, like the ones supplied by UTP Group. UTP Group provides a range of payment solutions, such as card machines, card reader and virtual terminals.

The advances in these payment systems mean that they are no longer the province of established, bricks and mortar retailers but can be used by window cleaners, builders or landscape gardeners to take payment from their customers on-site.

The internet needs to be available across the whole country and it must be reliable. It is no use expecting farmers to conclude a deal on livestock or tractors without using cash if they can’t carry out payment across most of their land.

But possibly the most important is to have the political will and popular support in place for the project. We have seen that in the most advanced countries the politicians and the people are accepting the move to cashless and are happy for this to go ahead. Without this support, a cashless society is a practical impossibility.

Where will the first cashless society be?

Everything we know about the advancement of a cashless way of living comes from pre-Covid days and it will be interesting to see how things have changed once we are able to get some fresh economic data but there are some general themes that we can point to.

Scandinavia is by far the leader in terms of moving away from cash. It has the infrastructure, popular support and government action in place to make this happen.

Often touted as the leader in this respect is Sweden, where only 15% of pre-Covid transactions were completed with cash. The country has made great strides in recent years and like most Scandinavian countries it has the political and public support to make it happen.

The country with the most aggressive timeline for moving to an entirely cashless model according to Global Data is Finland.

Probably the biggest driver is the high level of Finnish smartphone penetration which means that the population have access to the internet and cashless methods of payment wherever they go. Expected to be fully cashless by the end of 2022, it will be interesting to see where Finland is now following Covid.

Will we really see a cashless society?

It is distinctly possible that Finland will hit its target to be the world’s first cashless society in 2022 however several countries are hard on its heels including Sweden, China, The UK and South Korea.

The question now is not whether we will have a cashless society but when.