The use of coins and banknotes as a physical medium of exchange has been fundamental to the growth of human culture. Coins were first introduced in the 6th century BCE, with paper currency being developed in Tang dynasty China during the 7th century. It would take another 900 years before the first non-cash payment method would emerge. In the early 1500s, Dutch cashiers agreed to pay their depositors’ debts out of money stored in private accounts using the depositor’s written order. It is from these orders that modern cheques trace their origin.
Today, cash is once again under threat. But the menace is not a new medium of exchange. Instead, it is from digital payment methods – credit and debit cards, electronic wallet applications and cryptocurrencies. In a recent study by Smithers Pira, non-cash payments are projected to reach 1.96 trillion transactions by 2029, with an annual growth rate of more than 10% year over year. From the first credit card being issued in 1950 by Frank McNamara to the launch of Satoshi Nakamoto’s bitcoin cryptocurrency in 2009, the global payments industry is rapidly transforming, with new technology backed innovations being launched daily.
Despite the global economy’s continued reliance on cash, many industry experts believe that the move towards a cashless society is inevitable. South Korea aspires to be completely cash-free by 2020, a goal that is bolstered by the fact that a staggering 80% of the total amount of registered transactions made in the country are done so through electronic payment methods. European countries such as Denmark, Norway and Belgium are also on the frontline of this new financial development, but they still trail behind Sweden. Sweden is widely regarded as the most cashless nation in the world. “No Cash Accepted” signs are a common sight in shops and eateries, with less than 25% of Swedes paying cash at least once a week for their purchases.
Living in a Cashless Society
As with any radical social shift, the move away from physical mediums of exchange will benefit some more than others. For many, using cash allows them a greater degree of control over their spending habits and makes it easier to track daily purchases. A cashless culture also leaves behind vulnerable populations such as the elderly. While millennials prefer to use credit cards to make small purchases, baby boomers are not ready to embrace a cashless society, with more than 70% preferring to pay by cash.
Despite these drawbacks, numerous experiments conducted in different parts of the world have proven that a lessening of cash liquidity results in drops in unreported employment, human trafficking and various other illegal activities. Digital payment methods ensure that all transactions are verified and tracked, which helps root out suspicious activities. Equally important, small businesses could benefit from a cashless culture, as studies have demonstrated that an efficient, well designed cashless payment system can increase the number of hourly registered transactions by as much as 15%.
Instant Pay and Cryptocurrencies
As the use of cash declines in developed and developing nations, the global payment industry is increasingly looking towards new instant payment technology capable of providing users with real-time or near real-time processing capabilities. Currently, the instant payment infrastructure is sluggish. Bank transfers can take hours to complete while credit card transactions require several days to be posted to your account. In the future, we can expect transactions to be completed in mere nanoseconds. With processing no longer dependent on human verification schedules, robotic process automation (RPA) and artificial intelligence will ensure that transactions are continuously executed 24 hours a day, 7 days a week, 365 days a year.
Additionally, as a decentralized ledger shared and authenticated by partners, the increasing adoption of blockchain technology in the payment processing industry promises to facilitate fast, secure and low-cost international payment processing services. Eliminating the need for intermediaries such as correspondent banks and clearing houses, blockchain technology can accelerate international payment processing services and lower the cost of trade financing by streamlining record-keeping, thereby saving time and energy in the payment value chain.
Looking Towards the Future
At SolidTrust Pay we are actively investing in the future. That’s why our e-wallet it fully compatible with bitcoin. You can easily deposit bitcoin directly to your secure STPay e-wallet, where your deposit will be instantly converted to USD. Alternatively, you can withdraw funds to your personal cryptocurrency e-wallet using our easy to navigate dashboard. For more information, please click HERE.
Will you embrace the move towards a cashless culture? Let us know in the comments section below. If you enjoyed this post, please subscribe to our Blog and follow us on Facebook and Twitter for news, updates and more helpful content!