Author: Saramsha Aryal
Cashless society is a term used for the economic structure where monetary transactions are carried out through digital mechanisms. Digital money is not a new concept. Along with technological advancements and the increase of public reach towards technology, money has paved its way to the digital platforms. The Internet has forever changed our economies: it has revolutionized businesses, health, education, entertainment and even culture. One such area the Internet has changed is the way people handle their money. The origin of E-Payments has brought various opportunities and convenience to humanity. Much of which we are continuing to explore, not without its challenges, of course.
The risk of Covid-19 being transmitted through cash transactions has made digital payments relevant now more than ever. In the current pandemic, cash transactions are expected to be handled more carefully to avoid spreading the virus. On 9th March 2020, the World Health Organization (WHO) released a statement encouraging the use of contactless payments whenever possible to reduce the risk of spreading infections. Countries like China took measures to disinfect banknotes using ultraviolet lights and high temperatures. They stored it for up to 14 days in early February itself. The fear concerning the spread of infections has now pushed many countries towards being cashless.
Electronic payments are developing at a fast rate. This electronic journey which was already moving at high speed has now been accelerated because of Covid-19. The ongoing pandemic in all its havoc paved the opportunity towards going cashless. According to a report of the financial tech company Square, it saw an increase of its cashless buyers from 8% to 31% in the United States within one month during April, from 6% to 36% in Australia, from 9% to 48% in Canada and as much as 50% increase in the United Kingdom from 10% to 60%. This happened after the pandemic peaked earlier this April.
This might be the right time to shift the focus towards digitizing monetary transactions. Experts like Sulabh Agarwal point out that Covid-19 has given customers a good reason to be wary of public payments terminals. Likewise, according to a report of the North Carolina based non-profit organization RTI (formerly Research Triangle Institute), multinational financial corporation Mastercard recorded 30% of new users trying contactless payment methods since Covid-19 spiked. People have now started easing towards the idea of alternative payment mechanisms.
Prospect of digital Monetary Transactions
As the economies slowly start to recover from the economic halt, countries may start focusing on digital payments more. As a result, the existing digital mechanism could be made more secure. Countries which are in the formative years of electronic payment could also provide their platform with much-needed momentum. This includes countries like Nepal and Bangladesh, which might be moving towards ‘less-cash’ societies. On the other hand, more developed countries like Australia might not return to using traditional payment mechanisms.
Many banks in Nepal have foreseen the use of digital payments in all forums over the years. The encouragement towards being cashless has gained further boost because of COVID. Online shopping has increased tremendously worldwide amidst the pandemic. This provides opportunities for many online payment platforms like PayPal and Venmo. Use of similar apps for payment has already skyrocketed. Online portals are attracting more users as people are being inclined towards using digital payment methods because of Covid-19.
Going cashless now would lower the fear probable future pandemics like Covid-19 could bring around monetary transactions. Businesses must focus on easing their transaction mechanisms by which they will be able to survive an economic halt like this. To keep functioning online, however, there are various challenges which need to overcome.
The Coronavirus push to a cashless society brings some challenges. This digital push would not be uniform across different countries. While digital payments are a normal way of transaction in many countries like Sweden, where bus payments are also made electronically, these ideas are yet to reach the ground level in many parts of the world. Because of this, the majority of South Asian countries would not benefit from these platforms as much as they would like in the current pandemic.
Second, globally speaking, only 69% of adults have bank accounts. Current cashless mechanisms mostly require a bank account. This will be a challenge for countries whose citizens do not have easy accessibility to banks. The technologically and economically capable nations will lead a transition to a cashless economy and it will be a few years before other nations catch up in the cashless movement.
In the year 2003, the SARS outbreak had threatened the survival of Alibaba, now one of the biggest online commerce companies in the world. This was when the Internet emerged to be a turning point of mass media in China. Alibaba, therefore, changed the way businesses were conducted through the emergence of e-commerce, and this opportunity was found while quarantined due to SARS. Similar opportunities are now being explored by countries, and it is only a matter of time we will see extraordinary innovations in digital payments.
Covid-19 has induced cashless payments worldwide. Existing platforms are gaining much height, and explorations for new payment possibilities has been the call for the moment. What started as a health necessity could, in turn, change the course of payment mechanisms in our history forever. However, the inherent economic inequalities prevalent across the world mean it will take some countries a little longer to adapt to these developments.