Introduction
A "cashless society" is merely a concept or a condition of the economy in which all financial transactions are carried out electronically rather than physically with coins or banknotes.
If we look into the old days, we'll discover that cashless societies have existed since the early stages of human societies. There were several popular trading systems, including the well-known barter system.
Debit cards, credit cards, apps for mobile wallets, POS systems, mobile payments, online banking, etc., make it feasible to make cashless payments in the modern era as well.
Types of cashless payments
A user can avoid using cash to make payments in several ways. Let's discuss each of them individually.
1. Banking cards
One of the most popular cashless payment methods worldwide is using banking cards like debit and credit cards. Banking cards offer several advantages, including convenience and safe transactions.
One of their main benefits is that banking cards can be used to make various kinds of digital payments. For example, a user can make cashless payments by storing his card information in digital payment apps or mobile wallets. Banking cards can also be used at Pos systems, online transactions, and other places.
Regarding banking cards, there are many reputable brands, including MasterCard, Visa, and Rupay.
2. USSD
A cashless payment option for people without smartphones is Unstructured Supplementary Service Data (USSD). This method's USP is that it allows users to make payments without the use of a smartphone or an internet connection.
To interact with a voice-based interface on a mobile device, the user must first dial *99#. To use this service, the client must ensure that his mobile number matches the one associated with the bank account.
This service employs the MMID and MPIN with a mobile number or account number with an IFSC code for a successful transaction, which is slightly comparable to the IMPS.
3. Mobile payment apps
Applications for mobile wallets are becoming increasingly popular because they offer quick, safe, and convenient payment options. The user can transfer, receive, and store money using mobile applications.
A user can add or store money in their wallet by simply connecting their bank account. The same goes for sending money to friends, family, or anybody else by entering their phone number, email address, unique ID, or scanning a QR code.
Additionally, a user can pay bills such as their water, electricity, mobile recharge, and many others directly from the mobile wallet app and make payments to merchants.
4. QR Codes
Quick Response is referred to as QR. It is a two-dimensional code made out of a grid of squares with a pattern of black squares. Imaging devices, like the cameras on smartphones, can read QR codes.
When completing a cashless payment, a user often only needs to scan the merchant service's QR code to finish the transaction.
5. Cashless payments
By just tapping a card against a point-of-sale machine, users of the contactless payment method can make purchases of goods quickly and securely. Any debit, credit, or smart card, also known as a chip card based on NFC (near field communication) or RFID technology, may be used as the card.
Since no signature or PIN is needed, cashless payments are super convenient. In addition, NFC-enabled devices that are directly connected to mobile wallets can also be used to perform contactless payments. In this case, the settlement only requires the user to maintain his NFC-enabled phone close to the scanner.
6. ECS
An electronic clearing service is often used for making huge payments, such as monthly installments, paying off utility bills, and distributing payments, such as dividends, interest, pensions, and salaries. Both debit and credit services are available through ECS.
The bank must grant authorization for making periodic credits and debits to start the ECS. ECS is a secure method since you may specify the maximum debit amount, the validity time, and the transaction's goal.
7. Coupons or Gift Cards
Apart from being a convenient way to avoid carrying cash, gift cards make excellent gifts. It allows the recipient to use a voucher to make any purchase. Additionally, many retailers provide discounts on gift cards.
3 Reasons that a Cashless Society is Unavoidable
1. It increases the transaction speed
Customers who pay with cash take longer to process the transaction than merchants or employees. Because of this, many firms have chosen to go cashless to benefit from quicker transactions and more efficiency.
Atlanta's Mercedes-Benz Stadium is one such company that decided to go cashless and discovered that it resulted in fast transactions, fewer processing times, and reduced end-of-day reconciliation time.
Sweetgreen and Salad have discovered comparable benefits. Sweetgreen found that it could do 5–15% more transactions per hour at its cashless locations. Similar findings were made by Tender Greens, which found that cash transactions were 4–5 times slower than card transactions.
Additionally, faster transactions result in higher customer satisfaction, more income, and fewer errors.
2. It reduces risk and fights corruption
This is where cashless transactions are significant. Cashless payments may be one of the most effective ways to fight corruption and organized crime worldwide.
Payments would be utterly transparent if everyone were linked via end-to-end payment infrastructure, resulting in a cashless environment.
Everyone digitally connected in the cashless environment could see precisely where the money went and how it was spent, regardless of whether it was a private enterprise or an international charity.
Any money found outside the boundaries can be quickly found and investigated. This would help law enforcement and forensic accountants focus their time, making detecting and recovering stolen money simpler.
Cash theft by employees, fake currency, and cash robberies are just a few company risks eliminated by using cashless payments. It also lowers the expenses associated with security, bank withdrawals, transportation, and counting.
3. It eliminates the intermediary
A cashless society is a broad idea that covers more than just the shift from cash to cashless payments.
A society without cash would be one where all value is exchanged without a loss (processing costs or any other cost).
Because there are no processing fees in a cashless society, the money saved can help people in need. The money saved can then be used to rebuild struggling areas.
Everyone will have access to money in an actual cashless society. The last mile of money transfers, banking services, and payments will be crucial in achieving global financial inclusion and a cashless society.
Conclusion
There are still many years before society is entirely cashless. However, a significant financial technology development may cut this time in half. Cashless payments may become quicker, more transparent, and more secure than ever with the introduction of cutting-edge technology and continuous refinement of existing systems. Only time will be able to tell when our society will go cashless.