Is Covid-19 Ushering The World To A Cashless Society?
Covid-19 and the emergence of the cashless society
Ever since technology graced our financial world, we’ve seen a tremendous transformation in the financial sector. E-commerce has grown to an online business that makes the difference as online shopping is booming, thanks to Covid-19.
According to reports, Amazon’s value has soared by US$570 billion this year alone. The virus has profoundly affected the global economies, predicting that global payments could plunge to between 8–10 percent of total revenue.
Consumer spending behavior has significantly changed over a couple of years, but it’s believed that the pandemic will further quicken the shift to a cashless society.
Now, the question would be: Is this the beginning of the end of cashless payment?
The Falling-off of Cash
Right after the pandemic started, cash was seemingly on the decline for years. Several people iterated that the ever-increasing digitization is synonymous with progress. In their eyes, it’s seen as a way of leaving the cumbersome, historical artifacts of banknotes and coins behind.
Corona virus has fast-tracked this move away from cash. Suspicion of microbe-ridden banknotes has seen cashless payment become an unprompted public health standard.
Since the World Health Organization caution, retailers have been taking precautionary measures as others refuse cash payments. The potential of not using cash is on the rise. For instance, China unveiled a sovereign digital currency, the eRMB, predicting that cash will decline even further.
In Africa, cashless payment is potentially evident but remains on the edges. In Europe, around 79 percent of entire transactions in volume and 54 percent of the transaction in value, based on the recent World Cash Report by security firm G4S.
What does this mean?
In these unprecedented times, a cashless world is brimming on the horizon as the corona virus has finally given the public a strong reason to give up cash. There’s no doubt that we’ve seen widespread consumer behavior even to those who were skeptical of going the cashless route.
To a certain extent, consumers believe that by using cashless payments, one gets much-needed reassurance while shopping in the stores during this period. Several retailers and consumers have resulted in seeking touch-free payment options.
What that means is that it’s becoming second nature for consumers to tap their card to make a purchase instead of using cash or hitting on a PIN pad.
On the other hand, financial institutions are embracing the whole idea of contactless payment. The Central Bank of Kenya put out measures to curb the virus in mid-March to facilitate increase use of mobile money instead of cash.
The free mobile money transactions of less than Ksh1,000 were extended until December 31, 2020.
Although this new directive saw Kenya’s multinational telecommunication company Safaricom making a loss of $52 million in money transfers within a period of three months, the waiver was received positively.
Consequently, countries like Canada, Ireland, Poland, Greece, and Turkey have seen MasterCard and Visa keenly working with the governments to offer a touch-free experience to customers and creating an enabling environment for merchants to accept contactless payments.
Nations like Japan — cash-based economies — are contemplating a federal growth strategy to foster a cashless society culture to counter a post-Covid period’s needs.
Is The Future Cashless?
As arguments are made both in favour of and against a really cashless society, Covid-19 has made it clear that some businesses can either flourish from it or need to go the cashless route to survive. The pandemic’s impact seems to be long-lasting, if not felt forever by the looks of things.
Even though the contactless methods are the most regularly available touch-free payment option, they’re devoid of any added security and authentication. It follows that up until recently, terms like “Cashless” and “Contactless” no longer remains as futuristic sci-fi movie but a concept already with us.
According to MasterCard studies, consumers are quickly adopting contactless payments for their everyday purchases as they seek cleaner and safer touch-free payments.
Final Thoughts
With the second-wave of corona virus taking its effects, and many people still working from home, the shift to a cashless society is crawling in imminently.
However, the switch to a cashless economy depends on a robust digital infrastructure and numerous alternative payment methods. Of course, a larger section of society will raise concerns about the cashless system.
From lack of adequate security to reluctance to adapt to the system, going totally cashless requires plenty of willing participants. Whereas we’ll likely never to see a day where physical cash is worthless, several people are still confident in it remaining in power alongside the sense of security it provides.
Indeed, Covid-19 has greatly given the financial sector food-for-thought with regards to cashless payment. Only time will tell whether or not the society in the World will transform into a cashless society.
