As a result of technology advancements in digitization and data processing, electronic means of payment have become more accessible, convenient, and cost effective. Companies and customers are increasingly opting for electronic payment alternatives over cash payments. Financial experts have been predicting the disappearance of cash transactions for years now, however some feel it will never completely disappear.
Change in payment habits:
It is well known that in the northern hemisphere of Europe, in particular in Scandinavian countries, the decline of cash payments has been going on for years now. In fact, In Sweden the use of cash fell from 39% in 2010 to just 9% in 2020, with predictions that it will continue to decrease in the future (Riksbank, 2020). However, we are now also noticing this decline in southern European countries such as Spain and Italy who are known lovers of cash payments. This has also been as a result of the COVID-19 pandemic as people have changed the ways in which they consume.
“Cosumers have changed their behaviour as a result of the pandemic”
Reasons for these changes:
People are less likely to go into physical shops or restaurants and therefore less likely to use physical money. For example, the increase in Cloud restaurants has encouraged the use of electronic forms of payment.Cloud restaurants are restaurants with singularly an online presence and no phyisical presence. This meaning that there is no option to dine in, they only operate through food delivery apps such as Glovo, deliveroo etc.
In response to the rise in online shopping, COVID-19 has spurred a lot of conventional brands and merchants to upgrade their e-commerce facilitating the use of online payments. Customers will be more likely to give retailers their money and time if they have a wide range of payment options such as, auto-fill billing and shipping information, and one-click purchasing with fingerprint or facial recognition on mobile devices.
Is the future cashless?
On the other hand, many feel as though there’s a reason why physical money has been around for so many years despite credit cards and other forms of technological payments being introduced. Some reasons could be because cash is almost untraceable, convenient to carry around with you and is widely acknowledged. Cash seems to almost act as a backup plan if something were to go wrong technologically such as an issue in the online system causing the online commerce to fail. It is a sure, safe method of payment that you know will be accepted worldwide.
To conclude it is obvious that the ever-advancing technological world in which we live in today will prioritise the use of digitalized payments however the question still resides as to whether cash transactions will truly disappear.