This week, we explore different societies’ shift towards cashless payments. Centuries ago, people barter trade by exchanging goods they had for goods they needed. When trade got increasingly more complex and people needed to find better ways to trade for goods they needed, commodity money was invented. These were money in the form of items such as shells, tusks, animal skins that had certain value pegged to them. Eventually, paper notes were used in China in the form of IOUs.

Watch this short clip on how the use of paper money came about:

In the past few years, cash is losing its supremacy in the exchange of goods and services. Electronic and mobile payment systems have changed the way we exchange money. Some countries are ahead in this digital transformation, while others are playing catch up. Sweden and China are two of the leading countries which have sped ahead with cashless payments.

The amount of cash circulating in Sweden has dropped to merely 1% of the country’s economy. It is the country’s aim to go completely cashless by 2025, and the government and central bank are looking into the implications and challenges of implementing a national digital currency (e-krona) to respond to this change of cash phasing out of the economy. One of the advantages of the banks reducing reliance of cash is lowering the risk of bank robberies. There were significantly less bank robberies last year compared to a decade ago.

In Asia, China has leapt ahead in the fintech race with its two major e-payment systems: Alipay and WeChat Pay. Chinese society skipped the stage of using credit or debit cards and directly made the switch from cash to mobile payments. By enabling a simple use of QR codes to make payment, the amount of mobile payment soared drastically in three years from 1.2 trillion yuan in 2013 to 58.8 trillion yuan in 2016. There were fewer barriers to consumer behavior change than in other societies as the Chinese had few options of payment besides cash in the past few years before the technology was introduced.

In Singapore, the government is pushing for a cashless society and consumer behaviors are slowly being changed. There has been an increase in mobile payment options and developments to consolidate the infrastructures such as a common QR code for the 27 payment schemes currently available. More than eight in 10 Singapore consumers have adopted e-payments, and almost three in five merchants accept e-payments. However, the rate of adoption is slow and there is some resistance to change.  

The shift towards a cashless society inevitably comes with challenges and trade-offs, as with other societal changes. In fact, some Swedes have voiced their concerns about the country getting rid of cash too quickly. There are still concerns about security and accessibility to technology. This form of digitization of how people exchange goods and services could leave certain vulnerable groups behind, especially the poor and the elderly. In some informal sectors of the economy, or where banks are not fully accessible, cash is still the only viable form of transaction.

Despite the challenges and outcries by various groups, the authorities are adamant that digitising financial services is the way forward. They would need to ensure that privacy and security concerns are sufficiently addressed, amongst other things. Consumers have no choice but to catch up with the times, and help one another adapt to the new methods of transactions.

Questions for further personal evaluation:

  1. What do you think are the challenges of going completely cashless?
  2. How does going cashless benefit the different groups of society? How does it leave some groups behind?

Useful vocabulary:

  1. ‘allure’: the quality of being powerfully and mysteriously attractive or fascinating.
  2. ‘rife’: of common occurrence; widespread
  3. ‘implications’: a likely consequence of something
  4. ‘legions’: a vast number of people or things

Here are more related articles for further reading:

  1. Vox: How going cashless will push low-income groups out of the economy, and what is being done to addressed this issue in America

“Some retailers, like Walmart, are addressing the issue by selling prepaid cards for customers without bank accounts. And United Airlines has kiosks at airports that also allow cash-only customers to buy cards worth different values.

While prepaid cards help cash-only customers, they’re not a panacea in an increasingly cashless society. Some lawmakers want regulations in place to prevent consumers who don’t use credit or debit cards from being left behind.”

  1. Atlantic: Tracing digital payments make it easier for governments to monitor, scrutinise, and censor illegal activities

“In a cashless society, the cash has been converted into numbers, into signals, into electronic currents. In short: Information replaces cash.

Information is lightning-quick. It crosses cities, states, and national borders in the twinkle of an eye. It passes through many kinds of devices, flowing from phone to phone, and computer to computer, rather than being sealed away in those silent marble temples we used to call banks. Information never jangles uncomfortably in your pocket.

But wherever information gathers and flows, two predators follow closely behind it: censorship and surveillance. The case of digital money is no exception. Where money becomes a series of signals, it can be censored; where money becomes information, it will inform on you.”

Picture credits:https://pixabay.com/en/ec-cash-paymentsatm-money-cashless-1750490/