CASH LOSING TO CASHLESS IN TODAY'S ECONOMY

By Theodore Wilson

JRN100 Staff Writer

In the last decade, consumers have gone from “cash is king” to “nobody carries cash.”

According to a recent study from Pew Research Center, “More Americans are joining the Cashless Economy,” a cashless society may be coming sooner than previously thought. Many nations are looking into the possibility of gradually eliminating cash as digital transactions become more common and practical. However, what does this mean for the economy and for people who still use cash?

Technology advancements that make it easier for customers to make payments without using physical money have spurred the growth of the cashless economy. Users may now pay for goods and services with a few taps on their devices thanks to the growing use of smartphones, digital wallets, and other contactless payment options. 

By 2025, consumer spending on digital channels is predicted to triple, while cash transactions will decline by more than 25%, according to a Visa Research study, “Innovations for a Cashless World”. The shift to a cashless economy has also been facilitated by the growth of mobile payments and e-commerce. However, if some groups, such as those who lack access to essential digital infrastructure or who prefer to use cash for personal or cultural reasons, are left behind, there is a risk that inequality will increase.

While there are many benefits to digital payments' simplicity and effectiveness, it is crucial to address potential obstacles and make sure that everyone has access to the tools needed for a smooth transition.

The cashless economy, according to Nicolas Ziebarth, an associate professor of economics at Auburn University, offers customers several advantages. Digital payment solutions give consumers who are always on the go more convenience by eliminating the need to carry cash or find an ATM. In comparison to traditional cash transactions, making purchases using a smartphone, tablet, or other digital device is not only more practical but also quicker and more effective, reducing wait times and improving the overall shopping experience.

Based on Ziebarth’s research, along with being convenient, the cashless economy can help to decrease crime and improve public safety. There may be fewer opportunities for theft and other crimes involving cash transactions if there is less cash in circulation. Additionally, digital payment systems offer a transparent digital trail of all transactions, which facilitates the tracking down and arrest of offenders. Using digital payments can reduce the need for individuals to carry sizable amounts of cash, making them less of a target for theft or robbery. 

"Removing cash would also make it more difficult for people to avoid paying taxes," Ziebarth continues.

The COVID-19 outbreak is one significant issue that has lately contributed to the future of the cashless economy. This has substantially facilitated the shift to a cashless world. Several businesses have asked for contactless payment options, while others have stopped accepting cash altogether due to concerns that the virus could spread through cash transactions. Ziebarth claims this action is a component of a larger movement toward a cashless society. The changeover has been greatly aided by the simplicity of cashless transactions. Users using credit and debit cards no longer need to carry cash, or count change. 

"It's not only that more physical stores are no longer accepting cash, but it's also the increase of internet shopping, which requires a credit card," Ziebarth notes.

On the other side, the shift to a cashless society raises concerns about the financial isolation of those who lack access to digital payment options. The fact that some persons lack access to a bank account is mentioned by Ziebarth. The main issue is unquestionably financial inclusion. Around 1.7 billion adults worldwide are unbanked, which represents about 31% of the world's population aged 15 and over, according to the Global Findex Database of the World Bank. It's clear from this that a sizeable minority of people—nearly 20%—remain opposed to opening a bank account.

Governments must address the issue of financial exclusion as the economy shifts away from cash and make sure that everyone has access to digital payment options. Even if the shift to a cashless society is inevitable, rules that enable financial inclusion and consumer protection must be in place to support it.

Around 1.7 billion adults worldwide are unbanked, making up about 31% of the world's population aged 15 and older, according to the World Bank's Global Findex Database for 2017. This suggests that a sizeable percentage of people—nearly 20%—remain opposed to opening a bank account.

However, an increasing number of consumers have fully embraced the cashless economy, like Stonehill College Junior Colton Richie. Richie recently discussed in an interview how the development of digital payments has changed his way of life and the way he earns and spends money.

"I don't have to worry about having cash with me," Richie said. "Anything is possible with my phone or a card."

Richie suggested that because future generations will reject genuine money, cash is no longer useful. He did, however, admit the disadvantages of the cashless economy, such as access and privacy issues.

"Everything is recorded today, so it feels like you don't have as much control and privacy," Richie stated.

While using a phone or credit card to pay is more practical, he made the point that doing so exposes users' financial information to hackers and other forms of digital crime.  

Richie's responses demonstrate how the cashless economy affects people's lives in both positive and negative ways. Recognizing these effects as the world progresses toward a cashless future is essential, and efforts can be made to find solutions that prioritize convenience as well as diversity.

Based on included research, and this information from the Pew Research Center, “More Americans are making no weekly purchases with cash”, cash looks to be becoming less popular as a means of payment in the United States and throughout the world as cashless alternatives become more common. It will be interesting to watch how the cashless economy develops and how it affects our daily lives as technology advances and new payment options appear.