Lately, we are witnessing burgeoning trends toward the adoption of the digital era, which also encompasses the revolution of how we make transactions. Recent data shows the rapid embrace of cashless transactions, and businesses and individuals alike are inclined toward digital payments.
Businesses are looking for ways to improve their efficiency and profitability and thus opting to go completely cashless, which has a lot of problems associated with it. This means that instead of accepting and counting cash at the end of the day, they will accept payments via cards, contactless and mobile devices, POS solutions like wireless credit card terminals, etc.
These devices and methods help them escape the hidden costs associated with cash and involve less stress in managing the monetary aspect of their business. When it comes to paying their vendors, these companies use their business credit and debit cards. Also, cashless payments provide the utmost convenience and a simpler way to pay for the things they need, whether they are making an online payment, over the phone, or face-to-face.
But the question that nags here is whether we are going to be completely cashless in the future. Let’s dive in depth and weigh the pros and cons.
The Overall Rise of Cashless Transactions
In recent years, there has been a mass and rapid shift towards cashless transactions regardless of how they are being paid. This is primarily because of the rise of digital payment methods such as mobile wallets, contactless cards, online banking, and credit card terminals wireless. According to a study by Grand View Research, the global digital payment market is expected to reach USD 15.27 trillion by 2025 which is growing at a CAGR of 18.1% during the forecast period.
The Current Cash Situation in the USA
There happened a recent study by Gallup showed that the number of Americans paying with cash is decreasing at a rapid pace, plummeting from 36% of the population in 2011 to 24% in 2016. That is quite a substantial decrement. Young Americans are primarily shaping this trend, with only 21% of them in the past 5 years.
The Benefits of a Cashless Mode
There are several benefits to cashless transactions given below:
Convenience
Scanning your phone or swiping a credit card simplifies shopping and buying general commodities and makes it quick. Customers are not required to count out cash or have trouble finding change. It lets you buy whatever you want and wherever you want without having to first think about having cash or withdrawing cash.
Also, there is a digital record being saved all the time, and it can help law enforcement agencies with things like curbing money laundering, etc. Most types of cashless payments give details about where a purchase was made and what was actually bought. In the last, cashless transactions are quick and easy which allow customers to make payments with a simple tap or click.
Efficiency
Cashless transactions reduce the need for physical currency, which makes it easier for businesses to manage their finances. Also, as there are no notes to take care of, both businesses and people alike get ready with payments and transactions, which boosts overall efficiency, and there are no long queues of customers as it requires a tap, dig, or swipe.
Security
Cashless transactions are more secure than cash payments, and they reduce the risk of theft and fraud. Assume you have a bunch of cash notes and theft happens, and all your notes will be gone, but in the case of a cashless scenario, there would be nothing if someone comes and snatches or tries to rob. People can easily go and get their cards deactivated, which will be useless. And also, a card without a pin would be useless to have it.
Challenges of Cashless Transactions
While cashless transactions offer a plethora of benefits, there are also some challenges to consider:
Infrastructure
Not all businesses have the necessary infrastructure to support cashless transactions, such as card machines or mobile payment systems, so in case of buying from such a business, you would need to have cash, and you may have to visit the ATM for cash so you can’t go all cashless as of now or even in future for few years as the adoption will take time.
Accessibility
Not all living in rural areas don’t have cards or anything else to go cashless. There is a huge population living in rural areas, away from urban areas, so you can’t expect everyone to have access to digital payment methods, such as those in rural or underserved areas.
Security
Cashless payments are fully secure, but your money could be stolen or robbed if a cyber-attack occurs and you are keeping a huge amount in your account and they will be hard to recover so you can’t say they are not foolproof and can still be vulnerable to cyber-attacks and fraud.
Will Completely Cashless Transactions Rule Business in the Future?
While cashless transactions are becoming increasingly popular, it is unlikely that completely cashless transactions will rule business in the future. There are still many situations where cash is preferred and people want to have cash at all costs. It could be for such as small transactions or transactions in rural areas. Also, there are concerns about the security and accessibility related to digital payments so you can’t expect to be going cashless anytime soon.
The Future of Transactions
So, what does the future of transactions look like? It is likely that we will see a combination of cash and cashless transactions. We may also see the rise of new payment methods, such as cryptocurrencies and biometric payments.
Conclusion
While cashless transactions are being adopted very fast and everywhere in the world, it is unlikely that completely cashless transactions will fully prevail in business in the future anytime soon. Instead, we will likely see a combination of cash and cashless transactions and you will see demand for online accounting services as businesses would need accounting services for their taxation and everything. As the world is constantly evolving and new technologies are coming out, it will be interesting to see how transactions change and adapt to meet the needs of businesses and individuals alike.