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Maria YinYang Group

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Gustav Suvorov
Gustav Suvorov

Cahless Society

The rise of digital payments, including credit cards, debit cards, and mobile payments systems, have contributed to the steady shift in payment practices among consumers. According to the FDIC, cash represented just 30% of all payments in 2017, and the percentage of U.S. households with a credit card jumped by more than 5 points between 2015 and 2017. Business owners who recognize this trend are responding accordingly, with some opting to go entirely cashless in an effort to increase operating efficiency, reduce wait times for customers, and create a safer work environment by mitigating the risk of theft. However, driven by concern for those without access to banks and cards, legislation in some cities is limiting the move to go cashless. This article cites several factors managers should consider as they mull whether to continue taking cash, and predicts that the full move toward a cash-less society is unlikely anytime soon.

Cahless Society

Third, for some business owners, a cashless business model is a strategic choice that provides clear benefits. While much of the current narrative regarding a cashless society is focused on the downside, there are advantages for both business owners and consumers. The key is understanding customer payment preferences.

More and more of us are finding more and more ways to buy, sell and store our money, but about 70 percent of Americans still use paper money on a weekly basis. Harvard economist Ken Rogoff does not want to get rid of cash, but he does see problems with it. So we called him to ask why and ask what getting rid of cash would mean to our society.

KELLY: You mentioned Sweden. They are way farther along this path towards a cashless society than the U.S. is. We had a story out of Sweden recently on ALL THINGS CONSIDERED, where there were mixed views - some Swedes feeling like this is maybe going too far, too fast; others feeling like, what's the problem? - especially the younger generation. Do you think Sweden is where the U.S. is headed? Is that our future?

ROGOFF: But by and large, technology will play out and will adjust. It won't be as fast as people think. And by the way, I don't believe it'll be cryptocurrencies. I think it'll be simpler digital mechanisms. There are some vulnerabilities we need to cover - like cybersecurity. We're there already on having to worry about that. But I think we are headed to a less-cash society whether people want to recognize it or not.

It is great to see this pushback against the supposed cashless future because this is a trend that should very much be nipped in the bud. There are several reasons why cashless stores, and a cashless society more broadly, are a bad idea. Such stores are:

The use of bank notes in Canada for payments has declined consistently for some time, and similar trends are evident in other countries. This has led some observers to predict a cashless society in the future. This paper considers the implications of the abandonment of the use of cash in the future. More specifically, we look at a variety of ways in which the emergence of a cashless society could affect key concerns of a central bank, including seigniorage, monetary policy, payments and financial stability considerations. We find that a cashless society would not generally cause material, system-wide problems. There are a few areas, however, where concerns could emerge: the maintenance of both operational reliability and contestability in retail payments, and the provision of a safe store of value in an (extreme) financial crisis. We note policy options to address these potential concerns.

The falling use of cash and the advent of digital technologies support the possibility of reconfiguration of monetary transactions without any intermediation of physical monetary tokens. The introduction of electronic money, especially in the guise card-based technologies but also as pre-charged software enhanced the optimism for a quick passage to a cashless, even a moneyless society. Nonetheless the prognoses for the elimination of cash have proved wrong so far and it is rather electronic money that struggles for survival. This paper explains why the initial enthusiasm about electronic money is running of steam. After defining what electronic money is and analyzing the data about its penetration in different countries a series of reasons for its failure are offered; even in the case where e-money is considered a success, the success story is contested. The small importance of e-money in retail payments today suggests the possibility of a society with minimal use of cash but without e-money. This is a more appropriate context for engaging with the projects of Singapore's Electronic Legal Tender and of the Single Euro Payment Area.

Ever since the first general-purpose charge card debuted in the early 1950s, pundits have been predicting the cashless society. Over fifty years later, we may finally be getting close to that vision. This study is the first to examine empirically the move toward a cashless society using a cost-benefit framework. We find that when all key parties to a transaction are considered and benefits are added, cash and checks are more costly than many earlier studies suggest. In general, the shift toward a cashless society appears to be a beneficial one.

In the aftermath of the Covid-19 pandemic, China has launched its digital currency, the digital Yuan or RMB, in its bid to become a cashless society using contactless payments, and is poised to become the first country in the world to do so.

Several bills have been introduced in Congress that would make it unlawful for physical retail establishments to refuse to accept cash as payment. Although the bills remain in limbo, the prospect of a cashless society will continue to grow as fintech advances.

There will come a point at which the cost of maintaining the infrastructure to support cash transactions is no longer affordable, leading to an acceleration in transition towards digital payment methods. Experts are warning that rising bank charges and disappearing branches will force businesses to ditch cash before customers are ready. A recent report from Access to Cash warns that going cashless too soon could mean millions of people are financially excluded and at risk of exploitation. This emphasizes the need for banks, governments and FinTech companies to work together to ensure that the most vulnerable, the underbanked and the elderly are protected, and that the transition to a cashless society is as smooth as possible.

A cashless society also provides scope for more monetary policy. With physical cash, people choose convenience over other safe assets offering higher yields. During economic downturns, governments face challenges stimulating the economy by lowering interest rates, since people are likely to hoard their cash instead. This means governments and central banks have limited power, also known as the zero lower bound theory.

A cashless society also poses risks for those without bank accounts finding themselves further marginalized and without support. Those less financially stable may lack the technology for making payments and would thus have no method of getting paid or receiving financial aid. To tackle these issues, several charitable organisations are experimenting with contactless ways to give donations to charities or to those in need.

Looking ahead, it is evident that society could benefit from changes to the way money is spent and businesses would enjoy reduced costs without the need for cash infrastructure, as well as increased efficiency and productivity. However, integration and implementation of new digital payment technologies would need to be carried out gradually. Robust systems would need to be put in place to support and provide for those who may struggle to access the technology, and for situations where technology could fail.

The cyclone that tore through New Zealand last week has exposed the dangers of a cashless society, prompting the central bank to consider new ways of ensuring access to physical money when power and telecommunications fail.

"Increasingly, central banks insist that cash will also play a role. We do not foresee a totally cashless society," said Ewald Nowotny, governor of the Austrian National Bank, at a recent conference in Brussels. "If there is for instance an energy blackout, cash is the only surviving way of payment."

"Cash provides trust," said Hielkema. Beyond cybersecurity concerns, critics of the cashless society have pointed out that vulnerable groups such as elderly and disabled people rely on cash more than others. "We see a lot of people who really need it," she said.

The decline in cash payments has raised the alarm for the Riksbank. Governor Stefan Ingves warned in June about the dangers of rushing into a cashless society, arguing it is moving too fast and may lead to a payment market "dominated by private players with no public alternative."

Early ideas of a cashless society were expressed by Edward Bellamy in his novel Looking Backward.[5] The trend towards the use of non-cash transactions and settlement in daily life began during the 1990s when electronic banking became common. By the 2010s digital payment methods were widespread in many countries, with examples including intermediaries such as PayPal, digital wallet systems such as Apple Pay, contactless and NFC payments by electronic card or smartphone, and electronic bills and banking, all in widespread use.[3] At this point cash had become actively disfavored in some kinds of transaction which would historically have been very ordinary to pay with physical tender, and larger cash amounts were in some situations treated with suspicion, due to its versatility and ease of use in money laundering and financing of terrorism. Additionally, payment with a large amount of cash has been actively prohibited by some suppliers and retailers,[6] to the point of coining the expression of a "war on cash".[7]The 2016 United States User Consumer Survey Study claims that 75% of respondents preferred a credit or debit card as their payment method while only 11% of respondents preferred cash.[8]Since the founding of both companies in 2009, digital payments can now be made by methods such as Venmo and Square. Venmo allows individuals to make direct payments to other individuals without having cash accessible. Square is an innovation that allows primarily small businesses to receive payments from their clients. 041b061a72


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