Moving Towards a Digital Payment Mechanism Forming a Cashless Society

cashless society - digital payment method

Last year 2020 marked as trendsetter towards the cashless society. The world witnessed some major incidents and natural disasters at large scale that became the basis to adopt the digital payment method as an alternative solution to a traditional cash-based system.

Covid-19 worsened the economic situation, the world equally faced the lockdown restrictions and  situations that were put in place. Many businesses and corporations permanently closed due to these restrictions. The World Health Organization (WHO) announced to avoid public contact in order to limit transmission of the contagious virus disease. People then started making digital payments in order to keep away from the use of filthy banknotes or coins.

Some of the reliable statistics showed that cashless payment transactions increased plentiful as in recent years. The use of paper money and ATM withdrawals fell, respectively.

Zelle, US-based peer-to-peer payment services provider sent $39 billion via 147 million transactions, in the first quarter of 2019, the volume of digital payments increased over 70% in the last year.

ATM withdrawals in the UK were down by about 60% in April 2020. Similarly, ATM withdrawal in the Switzerland dropped by 50% in mid-April 2020.

Alternatively, findings through research conducted by Square, expressed that the rising trend in cashless payment was widely noticed after COVID-19 especially in the following countries: Australia's digital payments increased from 6 % to 36%, Canada from 9% to 48%, UK from 10% to 60% and the US it surged from 8% to 31% and so on.

A global movement to ditch cash as a payment method has been gaining momentum for a few years before COVID-19 hit but particularly more so now as the world is in this pandemic.

The younger population of China, relied mostly on the use of apps / mobile wallets to make payments and in Europe, just 1 out of 5 people carry cash.

Out of all the countries around the world, Sweden ranks first in using digital payments and has announced a cashless society by 2023.

Cashless Society

Making Life Easier With Digital Payment Methods

digital payment method

We have a good example below of how Sweden will determine how they are going to drop cash as a payment method and to adopt the cashless society.

In Sweden electronic payments over 90% are in circulation. The Deputy Governor of the Central Bank stated that cash which constitutes 1% of Sweden's GDP, is in circulation. More than half of the Sweden retailers believe that they will stop accepting cash by 2025.

Half of the Sweden’s 1400 branches accept cash deposits. Financial institutions encourage the customer to use electronic money instead of cash. The Central Bank of Sweden is planning to launch digital e-Krona, a digital version of the Krona, its national currency to provide an infrastructure to facilitate electronic transactions.

The international perspective of the cashless society:

According to the study of the Forex Bonuses, many countries including the UK, France, United States, China, Australia, Germany, Japan, and Russia will join Sweden to establish cashless economies.

In China, Alipay and WeChat pay are already dominating the retail payment market. Besides this, the trend of cashless payment options has been increasing in developing countries with the use of apps or smartphones, such as Bangladesh mpesa and Kenya's bKash.

Singapore may also become a member of a cashless economy. There are already many cashless payment options are in practice such as Apple Pay, grabpay, Paylah, Pay Now, and PayPal. Sweden is going to be a cashless society where most people make purchases through mobile payments or apps. A pioneer in digital technologies.

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