Take a look in your wallet. How much cash do you have? If you don’t have any cash in your wallet at all, you aren’t alone.
Many people are making the transition from spending with cash to mainly spending with cashless alternatives. These alternatives can include debit cards, credit cards, mobile payment apps, tap to pay solutions, and more.
People in some countries are making the shift to a cashless life faster than others. But have any countries made the shift to living in a completely cashless society?
There are no cashless countries… yet
Despite the allure of a cashless society, no countries have fully made the switch to having no cash at all.
There is one country that has a timetable to go cashless and many other countries that have their populations rapidly adopting cashless payment options. However, only time will tell if a country ever makes the move to go fully cashless.
Countries making moves toward going cashless
Some countries are moving toward a cashless society faster than others. If you want to live a completely cashless life, you may be able to do so without moving to one of these countries.
That said, living in these countries could reduce certain hassles like running into vendors that only accept cash.
Currently, Sweden is expected to be the world’s first cashless society in March 2023 according to [email protected]. However, their definition of a cashless society is one in which cash is not a generally accepted means of payments rather than not having cash and coins.
One reason why Sweden may be one of the first countries to be cashless is due to their laws. Stores don’t have to accept cash as a payment method even though it is legal tender. In other countries, stores may be forced to take cash because it is a legal tender, even if they don’t want to.
According to ForexBonuses.org, China has experienced the highest growth in cashless payments over the last five years. People in China often use phone apps and QR codes (those little squares of black and white pixels) to pay for purchases rather than credit cards.
The apps, such as WeChat Pay or AliPay, require a Chinese bank account to use, so tourists can’t use them to make cashless payments.
Certain banking apps in the United States also allow you to make purchases by showing a cashier a QR code, but it isn’t nearly as popular here. To make things even more complicated only certain stores accept these payments in the United States.
The United Kingdom has been moving away from cash and toward credit cards, debit cards, and contactless payments.
In 2016, card payments overtook cash payments for the first time. What’s even more interesting is 41 percent of cards in the UK have a contactless payment option, which isn’t very popular in the United States yet.
In some instances, you may not be able to use cash for certain transactions within the UK. This can often be the case for public transportation such as London’s bus system where card payments are the only option.
In South Korea, cash is decreasing in popularity. Cash only accounted for 20 percent of payments in 2018 according to a Bank of Korea survey. Technology, including money transfer apps, has helped accelerate this process.
On top of the rise of technology-based payments and the decrease of cash, South Korea is considering eliminating coins completely. This will help them save the money it takes to produce the coins.
In 2017, South Korea ran a trial to see how eliminating coins would work. Instead of having customers receive their change in cash and coins, people could receive the coin amount of their change on a popular prepaid card. Bank officials hope that, if the trial is successful, change amounts can be transferred directly to a person’s bank account rather than a prepaid card.
Why you may want to go cashless
It makes it easy to keep track of your money
Going cashless can have a ton of benefits. It makes keeping track of your money much easier. Almost every single transaction you make, whether it be on credit card, debit card or an app, keeps a record of your purchases. You can then reference that data whenever you need to.
You can budget easier, too
The data collected to make bank or credit card statements can help you budget, too. You can use data aggregation tools, such as Personal Capital, to get a high-level overview of your finances by combining your purchases from multiple cards in one place.
You can make your money more secure
Many banks and credit cards allow you to set up alerts. You can customize these alerts to let you know when you’re spending more than you planned to.
You don’t have to worry about losing your card as much as you would with cash. If you lose cash, it’s gone forever. If you lose a card, it can be canceled and replaced in just a few days or faster in some cases.
Crime may be reduced
A move to a cashless society could help society in bigger ways, too. Without cash, crime may be reduced. Criminals typically use cash because it can’t be traced. If they had to use credit or debit cards that track every transaction, criminal activities would be much more difficult to get away with.
Additionally, the transaction data captured could be used to reduce tax evasion, too. People that used to get paid under the table to avoid taxes would no longer be able to do so. Even drug dealers would have to pay taxes.
Things to consider about cashless societies
Living in a cashless society may sound convenient, but it could cause a lot of problems. Cashless societies rely on technology and communications systems to process payments.
Hacks are all too common
All of our payment data and even our account balances could be at risk if the technology gets hacked. People that have been victims of identity theft can understand how difficult it could be to get everything sorted out afterward.
Technology and communications, while fairly reliable, don’t always work without problems. If the communications infrastructure goes down due to a natural disaster, hack, power outage or any other unexpected outage, you may not be able to make purchases or accept payments. Cash solves this problem, but without it you might have to wait until the systems are restored.
Cashless options aren’t accessible for everyone
Finally, bank accounts and credit cards aren’t universally available to everyone. Some people don’t have the necessary credit to open credit cards. Others don’t have access to bank accounts that don’t charge outrageous fees.
Instead, these people rely on cash to run their lives. Eliminating cash could make these people’s lives much more difficult, inconvenient and costly. They could have to turn to prepaid cards or other options that can have onerous fees if you aren’t an educated consumer and know what to look out for.
For some people, a cashless society may seem ideal. For those less fortunate and without access to banks, a cashless society could cause major headaches.
Time will tell whether moving to a truly cashless society is a good move or if it is even possible. It will be interesting to see what happens as other countries approach the possibility of being completely cashless. Until then, you’ll have to decide if you want to move to a cashless monetary system for your own personal finances.