How often do you find yourself paying with cash, writing checks, or interacting with bond certificates? Because a reality is soon approaching where money will be stripped of its tangibility, and digital currencies will emerge as the sole units for financial exchange.
Cash been under attack for a while, and now it’s intensifying. E-wallets replacing three-fold leather ones is old news. Now, cryptocurrencies such as Bitcoin, Litecoin and the like are leveraging their infrastructure and emerging as the next big thing for both investing and spending.
Sweden already operates a cashless ecosystem, and many view the Scandinavian nation’s model as one the US should follow. A Swedish initiative to stop accepting or carrying cash in banks is gaining traction and receiving positive feedback, and is just one of countless indicators that a permanent shift away from the use of physical money isn’t far away.
A large faction of the public is on board, too. A survey conducted by ING bank website eZonomics revealed some key findings. 38 percent of respondents said they were willing to go cash-free. Moreover, of the 34 percent that said they already rarely use cash, a staggering 78 percent said they expect to continue reducing cash usage going forward, propelling the abandonment and ultimate demise of the paper dollar.
The advantages of a going cashless
Before delving too deeply into the specific implications of the digitized economy, it’s important to grasp why it’s happening. Innovative technologies have been continuing to make the world a better, safer and more efficient place, and these couldn’t be any truer than in the context of money, where advantageous outcomes are already materializing.
The age of digitally transferring money means you you’ll never again have to wait until your friend gets exact change to pay you back. As opposed to physical exchange, a cashless society provides increased security of funds and efficiency of transaction, decreased opportunity for tax evasion and illegal cash operations, and the ability to track payments.
“I prefer to use ApplePay because it is convenient and feels more secure than any cash or credit transaction,” said Scott Schober, president of Berkeley Varitronics Systems, author, and cybersecurity expert.
From a more macro standpoint, these benefits encourage increased public spending and thus improved economic conditions. And the government might even stop losing money by making it.
The mobile push
Financial technology dubbed “fintech” is the driving force behind the cause. Particularly, a major factor advancing the cashless shift is the prevalence of mobile devices in our daily lives. Once solely responsible for making calls, smartphones are now the center of our personal finances.
“When choosing between our mobile essentials,” noted Schober, “phones are replacing wallets and cash for many.”
Certain money transferring apps like Venmo, Robinhood and even Snapchat are brilliantly making money a social thing, tapping into the widespread millennial penchant for sharing in today’s world.
The day when physical cash no longer exists is admittedly difficult to determine, but equally undeniable is that the movement is in full effect and ripe for more. It takes years for major societal shifts to fully manifest, and this is no exception. Every month we inch closer, as new technologies, applications and platforms emerge.
“The term e-commerce will eventually be redundant, as all commerce will be fully electronic,” said Derek Brown, CEO of Exeq, a personal finance and budgeting app that advocates for better spending. “We believe that the future of money is a cashless society, powered by digital currencies and mobile devices and enabled by technology that directly connects consumers to merchants.”
What this means for your business
Understanding that this is happening now and what it means for your business is critical.
Just like movie-rental stores, physical maps and landlines before it, the paper dollar is next up to be cut. Even businesses that have traditionally only taken cash, such as flea markets and vending machines, are adapting with the knowledge that forgoing a transition to digital exchange will only hurt their bottom lines.
Major credit card companies like Visa are strategically incentivizing small businesses in big ways to ditch cash in business operations. Ultimately, businesses that remain stubborn and fail to acclimate to the cashless world risk falling behind competitors who will optimize performance through fintech advancements.
“Many small businesses in 2017 never handle physical currency”, said business attorney Daniel Faizakoff. “And at this rate, it’s likely that they never will.”
And there lies the future of money. Its direction is clear, established and proven. The digitized economy’s integration into both business and personal finance has created too much positive impact to ignore. Failing to understand the gravity of this shift and respond to its environment will prove to be a pronounced setback when the cashless society does materialize.
*Nathan Feifel contributed to this article.