Firstly, the term ‘cashless society’ is commonly misinterpreted to mean that the country simply has no money. This is not the case; in fact ‘cashless society’ means that, due to the rise in usage of credit cards, debit cards and other methods, using cash as a method of payment is rapidly diminishing.
The new break through global report, “The Cashless Journey”, produced by MasterCard Advisors, reports how 33 major economies have transformed from cash-based societies to cashless ones. According to the report, the United States is approaching the “tipping point”, and apparently the only reason we are not yet classed as a cashless society is because Americans tend to still pay with cash out of habit. If this is the primary reason of why we have not yet joined the other 33 “cashless” economies, it may be clear that 2014 could be the year.
The global report also includes the value of all consumer payments, which added up to a whopping $63 trillion in 2011. 34% of this was done with cash, whereas cashless payments exceeded this amount and added up to $42 trillion. The report indicates that potential reasons for more payments being done without cash are new technologies, government programs and consumer preferences. It maintains that the change will create a more inclusive and productive economy.
However, as previously mentioned, it is not only the United States who are on the road to becoming a cashless society. Six nations were identified as “nearly cashless” based on the amount of consumer spend that was done so without cash. Belgium was the leader with 93%, France following close by with 92%. The United Kingdom and Sweden were even with 89%, and Australia was not far behind with 86%. These statistics totally prove that the term “cashless societies” belong primarily to first-world countries, whereas poorer countries and emerging economies are still transitioning. Egypt makes just 7% of cashless payments, with Indonesia a little higher at 31% and Poland at 41%.
The benefits of cashless societies have been widely expressed. The report says, “Cash takes time to get at, is riskier to carry, and by most estimates, cash costs society as much as 1.5% of GDP. Electronic payments, on the other hand, have been proven to boost economic growth, while advancing financial inclusion. It is for these reasons that countries around the world are working to make their payment systems less dependent on cash.” This sums up the situation perfectly, and explains exactly why emerging economies are aiming to shift towards a cashless future, just like the “nearly cashless” countries. Although it is highly likely that cash will always be used, most people now turn to making payments without cash, purely down to matters of convenience. The USA may well turn into a cashless society – it is already classed as “tipping point”, so how long will it take until they overcome this? Watch this space.
About the Author:
Hey there, I’m Blair Thomas, one of the Co-founders of emerchantbroker.com, the #1 High Risk Credit Card processing company in the US. I have 10+ years of experience in the electronic payments industry, managing several successful agent offices and registered ISO’s. I have dedicated my life to my business and also to developing my music career as a singer songwriter signed to Old Scratch Records.