Cashless Society

Cashless Society

                                                          (by Md. Danial Dirar, Nazifa Zaman)

What is a Cashless Society?

A cashless society is one in which actual banknotes and coins are not accepted in financial transactions. People and companies instead send money digitally, using credit or debit cards, electronic money transfers, bitcoin, or online and mobile payment systems like Bkash and Nagad. Although no contemporary society is cashless, many economists predict that consumer preferences, competitive pressures on companies, profit seeking by banks, and government laws aimed to enable cashless transactions will result in at least a few cashless societies over the next few years. Proponents of a cashless society claim that digital transactions are more convenient for both consumers and companies, and that the elimination of cash will reduce the number of criminal acts. However, the trend has been accelerated by banks that have made cash transactions less convenient for their consumers to promote the adoption of more lucrative digital services. The worldwide coronavirus epidemic that started in 2020 also significantly contributed to the rise of contactless and cashless transactions.

A global perspective:

Cash is still widely used as a mode of payment, notwithstanding a recent downward trend. There are 70 billion pounds worth of notes in circulation, or twice as much as there was a decade earlier, as reported by the Bank of England. In 2012, the use of actual cash as currency began a precipitous decrease that has only accelerated since then. by 5% in 2018, the use of cash decreased by 16%.Once upon a time, only young people used debit cards for contactless purchases. Retirement age customers have shown some of the most rapid growth in recent years as a result of their embrace of technological advancements and experts anticipated a cashless society by 2035, the widespread use of mobile and contactless payment systems has led to a precipitous drop in the usage of currency. Sweden and the other Nordic nations are shaping the future of a cashless society. Sweden is a global leader in technology innovation and is often considered to be among the most technologically sophisticated countries. Swish, the mobile payment system, is on the verge of becoming the mobile payment standard in Sweden. Already, more than half of the Swedish population uses the app, and only 13% of the population relies on cash. By March 2023, they want to have eliminated the use of currency entirely, making them the first cashless society in the world.

What are the drawbacks?

As with any significant shift, it will not be simple, and there will be several issues to resolve. There is a possibility that millions of individuals would be left behind by the transition to a cashless society. There are still a significant number of individuals who cannot make digital payments because they lack a bank account, credit card, debit card, or smartphone. These individuals are known as unbanked. In addition, there are still individuals with bank accounts who utilize a restricted number of financial services, as well as elders who lack the knowledge to use new digital payment options. This problem is exacerbated by the shift towards online banking, which is resulting in the closure of numerous bank branches around the nation, possibly leaving behind individuals who aren't comfortable with internet banking or who need help. Typically, consumers spend cash for minor transactions such as presents and contributions. They also use it to pay craftsmen, as opposed to bigger expenditures like as bills or vacation reservations. Moreover, a poll indicated that Britons like keeping cash on hand "for peace of mind."

Future of Bangladesh:

Bangladesh was already making significant progress toward a cashless society, and the Covid epidemic just expedited the trend. Digital commerce transactions more than doubled from 15% in March 2020 to 30-35% in June 2021, while card use increased fivefold from Tk 225 billion to Tk 1,250 billion over the same timeframe.

Digital payments increased trade and helped the government provide relief to Covid-19 victims. According to the December 2021 Mastercard Economic Outlook Report, e-commerce is the cornerstone of digital agility, which has driven more income throughout the pandemic. Before the outbreak, internet transactions increased more in countries with higher digital maturity. Increasing usage of contactless credit cards, QR codes, and mobile financial services (MFS) that provide solutions for the unbanked and micro-merchants are boosting digital payments. Bangladesh's attempts to create a cashless economy and boost financial inclusion have accelerated in recent years. Implementing legislative measures that adjust the regulatory environment, promote innovation, enable open loop payments in the nation's transportation system, and incentivize consumers and merchants for digital payments will be key to continued success. Promoting digital and financial literacy can help customers understand the services they're using and raise adoption rates. Incentivizing digital payments, allowing contactless debit card transactions, and deploying open loop payment systems will help accelerate digital transactions in Bangladesh.