- The Institute and Faculty of Actuaries has published a study that said a cashless society should open more opportunities for most stakeholders in many economies.
- It has been registered in 2015 that two billion people in the world are still unbanked.
- Visit The Financial Today’s homepage for more stories.
The news about cashless spending is not new. Many years ago, consumers have begun using plastics and debit cards to pay for their goods and services. The ever-changing technology has also made it possible for consumers to spend using several digital applications and software.
But with this current health crisis, the news about becoming a cashless society – forever – keeps on resounding primarily because many are stuck at home, and that holding cash can sometimes make us fearful, especially since we don’t know where that coronavirus has been. So is this the right time to go cashless? What if this is the end of paper money?
A Cashless Society?
In 2019, the Institute and Faculty of Actuaries, a chartered professional body dedicated to educating, developing and regulating actuaries based in the UK and internationally, came out with a study titled Cashless Society – Benefits, Risks and Issues that studied two African countries that are highlighting cashless initiatives in their area. The study concluded, “A cashless society and its underpinning digital economy should open opportunities for most stakeholders in many economies, including the financially excluded.”
But along with that optimistic conclusion came many challenging issues such as considering the needs of the poor, the affordability of digital software, government support and regulation, mobile phone penetration and innovation and addressing the needs of the consumers.
This study actually rings true for many countries. Although most such as Canada, Australia, France, Singapore and the United Kingdom are already going cashless, there are those that still pinpoint to the marginalized and vulnerable sectors – the poor, the old, and the sick – of society who are at most risks. After all, some of them don’t have debit cards. Some don’t even have applications or software on their phones to do their digital transactions. Others don’t have Paypal to transfer money.
In fact, the majority of the people around the world are still “un-banked”. According to the latest available Global Findex Database from the World Bank published in 2015, there are around 2 Billion people in the world who don’t do banking! Imagine that, 2 Billion people in the world! That is almost ⅓ of the entire population of the whole world. Interestingly, that figure may still have risen given that that study was conducted five years ago.
For many third-world countries such as the Philippines, many communities are still relying on their Social Amelioration Program (SAP), cash on hand to buy products and services. The many people lining up in barangays just go to show how much they need their cash.
The End of Paper Money?
So is this the end of the paper trail? For many who like to do digital transactions, they can still continue to pay for goods and services online, especially during this pandemic. For many of the countrymen who are “un-banked”, there is really nothing that we can do about that – unless we start training them, which is what many non-profit organizations are doing around the world.
So are we going to go cashless spending – forever – any time soon? Maybe, maybe not.