Cashless society coming soon to a country near you
The phrase “cash is king” is used when analysing the fiscal health of a business or investment portfolio. Given certain market conditions at any given time, it may be advantageous for a financial concern to hold a large amount of cash rather than ploughing assets into volatile investments or other insecure expenditures. In a downward market, let alone a full market collapse, the man holding cash still has some spending power, rather than, at worst, a long line of zeros on a screen reflected in the watery eyes of his private banker.
But what if we’re wrong? What if cash is not king, and the customer is not always right, and the world is flat, and fiddling around with coins and notes is a patently ridiculous and expensive way to complete transactions. Maybe we simply hold onto the nostalgic watermarks and the feelings we have when we hold the power of money against our skin because we’ve never had an intangible way to characterise our currency on a mass scale before. Do you know it costs more to mint a penny, than the value of a penny?
So, never mind that you can have all your assets frozen by a glitchy algorithm, a loss of reception, an administrative assistant who accidently checks the incorrect tick-box, a meteor colliding with a satellite, a hacker, a dead battery, an electrical storm or an out-of-control government; here are four countries from very different parts of the world racing toward eradicating the dinosaur of cash forever.
Did you know the Swedes produced Europe’s very first bank notes? It only stands to reason, having been ahead of the money game some 355 years ago, that they are the pioneers of the cashless society now. Sweden’s buses have not taken cash in years and it is impossible to buy metro tickets with cash. 900 of Sweden’s 1600 retail bank branches don’t accept cash deposits or keep any cash on site. In the countryside, you’re more likely to find an elk riding a bicycle than an ATM. Even church collection plates have NFC phone payment capability. As a result, circulation of the Swedish Krona has fallen from 106 billion in 2009 to around 80 billion in 2016.
Somaliland is one of Africa’s poorest countries. Despite this fact, it has not stopped a revolution in mobile phone usage being responsible for the formation of a region wide informal banking system. Even credit cards are fast becoming useless as everyone from large business owners to street vendors prefer to rely exclusively on the security and traceability of mobile phone payments. A 2012 survey showed that the average customer in Somaliland made 34 transactions by mobile phone every month. At the time, that figure was more than anywhere in the world. Given the global prevalence of SMART technology, we can only assume that number is growing not just in Somaliland, but many African countries where giant tech companies are setting up shop.
With recent non-cash payments reaching around 90% of all customer transactions, and 88% of the population owning and using a debit card, Canada is a country well on its way to making cashless life the norm. In 2013, Canada stopped producing new bank notes and minting new coins, so all the cash currently in circulation is finite. As businesses and banks opt for the money-saving advantages that come along with purely electronic transactions, what’s left of the population still using cash will find themselves with nowhere to spend or deposit their tangible currency. However, it seems to be a welcome development according to a PayPal Canada survey; the majority of Canadians preferring an electronic wallet to a leather one.
South Korea is known the world over for being a technological powerhouse of a country. Seoul, the capital of South Korea, is ranked as the world’s “leading digital city”. So, it may come as no surprise that it is a society moving very quickly toward a cashless paradigm. However, South Korea used to be an extremely cash dependent country, and the methods employed by the central bank and government to move the population away from cash transactions have set precedents around Asia. Imagine receiving preferential VAT (Value Added Tax) rates just for paying with a card instead of cash. And of course, when we say card, we actually mean phone.
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