A Cashless Society: Myths, Forecasts, and Concerns

The future is already here. But since it spreads sporadically across developed and developing regions, humanity hasn’t yet fully realised its presence. According to Statista, the largest share of cash payments carried out at retail stores and restaurants in 2020 was 69%, pertaining to Nigeria. In contrast, the countries with the smallest amount of cash used for the above purposes were Norway, Canada, and Australia — 5%, 5%, and 8%, respectively. Interestingly, the share of cash in the US was 12%, which already marked the advent of so-called cashless society.

Still, the total end of cash is unlikely to cinematically dawn on the fintech industry like in the best traditions of Hollywood. Conversely, this process is gradual and, by lapse of time, more influential organisations will turn their backs on cash or minimise its use to an extent that allows banking experts to confirm the banknote’s death. Is it a real-life scenario? Between 2018 and 2020, Europe has experienced an abrupt downfall in the use of cash for offline shopping, the leaders in this statistic being Switzerland, Italy, and Poland. Already in 2019, surveys confirmed that 5 Nordic countries on a par with the United Kingdom led the group of regions with the lowest usage of cash.

When did you last use cash? As the Guardian confirms, today only 1 in 6 payments involves banknotes. Moreover, the same source reports that the industry witnesses a 35% drop in cash transactions after the COVID-19 pandemic. Nowadays, these numbers rapidly grow, inasmuch as the unstoppable digitalisation turns paper money into digital currency, let alone the impact of Bitcoin and other cryptocurrencies. Do you remember the Gold Standard? Well, it has ceased to mean a thing in the UK since 1931, with the US following the trend. That’s why the dollar isn’t backed by gold anymore. Now we’ve got the fiat money system that enables governments to abstract from gold reserves by focusing on the decree. What’s next? Digital currencies are the future, but what role is prepared for cash?

Carrying Out Payments via Cashless Methods on the Market

Beyond question, paper money is a famous germ-spreader. So, after the COVID-19 outbreak, many people who receive wages in a digital currency try to refrain from using banknotes whenever possible. Since a cashless society presupposes zero cash, a reasonable question to ask would be whether banknotes will ever disappear entirely. And, besides, how long until a cashless society? As the survey indicated, the most popular cashless payment method in the US in 2020 was a credit card (38%), followed by a debit card (29%), cash (12%), and digital/mobile wallet (10%). A promising and easily extrapolated statistic, huh?

Whether you carry out business transactions or use a credit card for personal purchases, the factors of convenience, speed, and security while sticking to cashless methods shouldn’t be questioned. However, going fully cashless may potentially entail severe security and privacy risks. Yet, more on that later. Decentralisation in the banking sector may become a myth if the government resolves to refuse cash and track each digital transaction made 24/7, be it personal or business-related. That’s why cryptocurrencies gain popularity and remain a trending phenomenon for such a long time.

How to Run a Cashless Business?

Thanks to the global popularity of credit cards and payment apps, it’s not rocket science to launch a cashless business. Let’s quickly examine a few advantages of going fully digital with payments:

• Convenience. Dealing with a payment terminal is child’s play, not to mention that it’s far easier and quicker to manage accumulated finances as well as pay taxes directly from a smartphone. An utterly cashless commercial activity improves accounting and allows you to dispose of that old book with thoroughly documented transactions you’ve been inputting since the Dark Ages.
• Efficiency. Giving out change consumes time, so accepting online payments helps you steer clear of unnecessary counting and fiddling around with dirty banknotes. Additionally, you’ll need to wash your hands afterwards.
• Security. Almost every respectful payment and wealth management app, let alone a traditional bank’s digital offshoot, not only ensures seamless transactions but also provides the safety of your funds. VPNs, encryption or tokenisation, and multiple layers of authentication procedures help you sleep well after a long workday, being sure that the accumulated wealth is safe inside your digital wallet.

Now as you know the benefits of digital-only commerce, take a look at the following points to successfully move your business towards a cashless direction:

1. Make sure that you embrace all payment options. They usually include credit cards as well as customer loyalty and mobile payment apps. PayPal, Zelle, or Cash App transactions will do the toughest job, saving you much time and effort that could be spent dealing with paper money yourself.
2. Buy yourself a payment terminal. As simple as that.
3. Elaborate on a win-win loyalty program. Cashback and gamification discounts allow your customers to get the feeling of belonging to something huge.
4. Keep in touch with e-payment trends. Check out Request-to-Pay services, biometric payment means, payment fobs, and so forth. These will refresh your interaction with customers where they don’t expect an innovative approach.
5. Always have a plan B. When the system crashes or a customer can’t pay for the received service or product with digital currencies, it’s better to have an alternative option. Therefore, be ready to accept any other form of payment to make more clients feel comfortable.

Is a Cashless Commercial Activity More Secure?

Everyone knows that 90% of cash contains cocaine residue, right? In this relation, does using banknotes as a payment means bring you closer to criminals? Well, of course not. Then maybe it makes your business safer? Not really. Let’s address statistics. The international value of e-commerce losses to online payment fraud hit $20bn in 2021, and the growth rates are still increasing. Curiously, the value of fraud losses at cash machines in the UK has significantly decreased since 2003. The numbers reflected almost £75m in 2004, while in 2020, this value amounted to £28m.

Nowadays, banking and fintech organisations try their best to ensure smoother services and better security, so it’s relatively more secure to use cash. But is this modicum of safety worth bustling with banknotes? No doubt, system errors and security breaches are your worst enemies if you go utterly cashless. Nevertheless, they occur infrequently and almost always touch upon big tech players. By the way, EMV chip cards, encryption, and tokenisation shouldn’t be taken with a pinch of salt — they do the job.

Cases to Still Handle Cash: When Paper Beats Digits

The truth is pretty straightforward. You should choose cash over credit cards or other forms of digital payment when your preferred option is unavailable. Without a doubt, you don’t get bonuses, cashback, or other rewards while using paper bills. Neither do your clients. You also can’t build credit and remain uncertain whether your purchase is protected. Moreover, having a way with cash requires you to regularly pay attention to each banknote’s appearance because someday one bill may turn out to be counterfeit money. In other words, fake money can quickly ruin your day if it’s a, say, $100 bill. That’s why it’s always good to have a money detector machine at your office.

In fact, there’s one privilege you get once you choose the cash side. With digital money on a credit or debit card, you encounter a convenience fee while paying income taxes, car registration, and utilities. Debt reduction is a weighty argument against using your credit card too often. As long as you pay with cash, you eschew interest charges. If you’d like to have more favourable savings interest rates, direct your gaze at savings accounts offered by a wide variety of traditional banks. It’s a safe place to hold cash for a long time in case you prefer contactless payment means.

Legitimate and Illegal Reasons for Large Cash Withdrawals

What amount of money is legal to withdraw at once at your local bank branch? For instance, Barclays asks you to give them a 24h notice before requesting more than £2k just to make sure it’s there for you. Also, depending on your account type, you can withdraw smaller amounts from cash machines, starting from £50 and up to £1k per day. As a rule, ATM cash withdrawal limits range from $300 to $5k per day. Nonetheless, these figures vary depending on a bank, account you own, geographical area, etc.

You can have multiple reasons for a large cash withdrawal, but, most likely, you’ll need to explain them to a responsible authority if the sum exceeds $10k. Money laundering remains a widespread problem, so the law is strict when it comes to what’s referred to as ‘structuring.’ When criminals break up large portions of money into a high number of smaller deposits usually spread across various accounts to escape detection, it’s the most common money laundering technique called smurfing or structuring. Consequently, as long as you periodically withdraw sufficiently small sums of money from an ATM or bank branch, you’re in the clear and won’t be mistaken for a money launderer. The amounts of cash withdrawn will depend on the bank of your choice, country of operation, and account type.

In the US, to withdraw cash in the amount verging on $10k at once, you’ll need to expound your reason to both federal authorities and a selected bank if the sum is close to the established limit, according to the 1970 Bank Secrecy Act. Finally, you should distinguish between daily ATM withdrawals and debit purchases. For instance, the highest ATM withdrawal limit in the US belongs to Santander and SunTrust, ranging from $500 to $2.5k, while Huntington National Bank offers the smallest amount — $400. In turn, concerning daily debit purchase limits, the highest, again, pertains to SunTrust, with up to $30k, whereas the smallest is provided by the same Huntington National Bank.

How Does the Focus on Cash Affect Your Startup?

If you’ve decided to launch a startup within the IT domain, chances are you’ll probably need to have a way with digital currencies instead of material banknotes. Cash apps, digital wallets, mobile payment services, and maybe blockchain technology are gonna be your best friends. By building your future company around the idea of cash, you’ll severely limit the scope of your operations, narrow the audience of potential customers and partners, and burden yourself or accountants with piles of unnecessary old-school documentation.

All right, but how does digital currency work, and what perks will be in store for you when this side is already chosen? By definition, virtual currency implies a representation of real money’s value in the digital world, which can be stored, processed, and transacted via different media, such as a computer or mobile apps. So, why do you need to minimise the impact of cash on your startup? Because digital currencies:

• make your transactions more secure;
• reduce the concentration of liquidity;
• broaden the horizons for monetary policies;
• spur innovation;
• ensure convenience and efficiency for everyone.

Will a Digital-Only Business Imply Privacy Implications?

History knows multiple privacy implications of a cashless society. It’s always about a clash of titans between security and private data protection. At the same time, you tacitly sign to provide your personal information whenever you enter the digital world or carry out a contactless payment via your smartphone app. The industry doesn’t stand still in contemplation of data leaks, DoS attacks, and other manifestations of the hacking craft. Cybersecurity has been included long ago on the agenda of developed countries and leading IT organisations. Hence, it’s only a matter of time when the safety level of your digital funds will hit its maximum protection limit, which, by the way, is unlikely to occur in the near future.

Almost every successful software development company out there operates under the umbrella of VPNs, anti-malware software, encryption, etc. Today there’s no need to worry about privacy implications while running a digital-only business because the fintech industry offers a sufficient number of data protection opportunities. Not to mention that governments allocate billions of dollars to be invested in cybersecurity.

Is a Cashless Future Inevitable?

As already identified, an entirely cashless society is unlikely to come. Yet, digital currencies will continue to conquer the market and innovate the way people run businesses and carry out payments. Everything moves towards time management, efficiency, safety, and convenience, which is the area where material banknotes lose their privilege.

Already have a startup idea or want to make an already-existing activity fully cashless but don’t know how? Let DashDevs help you out: just contact us and get an opportunity to become the next innovative giant!