Have you noticed more businesses are only accepting plastic or digital payments? There’s been talk of society becoming completely cashless. Just how likely is it that cash and coins will really go away for good? Would it be much different from the digital currency world we currently live in?
Let’s explore and take a look.
What does a cashless society look like and how does it work?
In a cashless society, people and businesses use digital methods to pay for things instead of using physical money like coins and banknotes. This means they rely on things like bank cards and online payments to buy things or conduct transactions.
Thanks to technology, we now have a variety of payment options available to us. Like using bank cards, mobile wallets, and e-transfers. You can even use digital money like cryptocurrency.
A lot of people prefer electronic types of payment as they find it more convenient. Businesses want to make payments even easier. Governments want people to use digital payments. Banks and credit card companies would certainly like that too. Cashless societies may not exist yet, but experts predict they will soon.
What kind of business you run or buy from doesn’t matter. At this point, almost all make use of at least one of the cashless payment options listed below.
- Credit and debit cards
- Mobile and digital wallets
- Payment apps and services
- Mobile payments
- Bank transfer
- Prepaid cards or gift cards
Here are some examples of payment apps and mobile wallets:
Canada still has a long way to go before becoming a cashless society. There are talks of new services and currencies like; buy now, pay later, micro-payments, crypto, and even central bank digital currencies. Our central bank, or the Bank of Canada, is currently studying central bank digital currencies.
While similar to cryptocurrency central bank digital currency would be backed by the government. Meaning that the Bank of Canada would verify the transactions, so there might not be a need for the blockchain technology that Cryptocurrencies use.
You don’t have to look very hard to see what a cashless future looks like. It’s already here. Aisle 24, for example, is a cashless and cashierless 24-hour grocery store. They have locations spread throughout Ontario and Quebec.
Why are we trending towards going cashless?
In Canada, the use of digital payments has steadily been increasing for years. The COVID-19 pandemic accelerated the trend.
During the pandemic, experts advised against using cash. To encourage economic growth, and reduce the chances of passing Covid to others, they recommended the use of contactless payment methods. Many businesses adopted a no-cash policy, and contactless payment solutions became the norm. Research now shows that the risk of COVID-19 transmission through cash is low. Despite this, some people and businesses still prefer to use digital payments. This is largely because of the convenience but also because of the safety they provide.
There are many advantages of going cashless for both businesses and consumers.
- Digital records can prevent fraud and crime
- Contactless payments are easy for daily shopping and travelling overseas
- Can save time and resources
While going cashless can have advantages, it also has disadvantages.
- Some vulnerable people may find it harder to access payment systems, especially those under the low-income cut-off
- Not everyone has access to a bank account
- Technical problems, such as glitches or outages, can cause issues if you rely too much on technology
- Personal information is at risk of cyberattacks and online fraud
- The convenience of cashless payments may tempt people to overspend and mismanage their finances
- Paying interest rates
Moving too quickly towards digital payments could harm those who struggle with technology. Especially older individuals who may not be familiar with online banking. It is not a process that should be rushed.
How far along is Canada to becoming a cashless society?
Canadians are embracing the convenience of cashless payment options. This trend has been further accelerated by the COVID-19 pandemic.
Canada is fortunate to have the technology and infrastructure to help people transition to a cashless economy. In fact, a study conducted in 2021 recognized Canada for having the highest rate of cashless transactions globally.
The report rated each country out of 100. It may surprise some to learn that Canada scored the highest on the chart, with a score of 79.1 out of 100. Did you know that in Canada, approximately 83% of the population owns a credit card? That represents the highest usage in the world. Canadian cardholders also have the advantage of being able to access the highest contactless payment limit of C$250. Which is more than any other country.
What can we do to prepare for a cashless society?
To prepare for a cashless society, it’s important to understand what it means and how it works. This means becoming comfortable with digital transactions and possibly saying goodbye to cash.
Ways to prepare yourself for a cashless society:
- Familiarize yourself with online and mobile banking
- If you don’t already have them, get bank cards
- Learn about the security features of digital financial services
- Find the best bank interest rates
- Learn how banks and companies work together to provide options
- Stay up to date on digital financial education
Instead of completely getting rid of cash, we will probably see a mix of using ATM cash and mobile payments. This way, people can choose what they prefer. It’s important to make sure that everyone, especially lower-income and older people, can still use cash if they need to. It would be counterproductive to force everyone to go cashless all at once.
The way we pay for things is changing. As more people enjoy the convenience of digital financial transactions become more common, cash is becoming less popular. That convenience can come at a cost through.
Has your debt gotten out of control because it’s so easy to spend? Our expert credit counsellors are skilled at helping people get out of debt. Contact one of them today to find out how.