Cashless Society: The Future of Money [INFOGRAPHIC]

With all the innovations of this century, anything seems possible. We turn dreams into reality and the unthinkable to achievable. We have had huge advancements in technology including digital money where transactions are made without physical currency. It is now possible for real-time communications, for small businesses to operate globally, and money sent internationally all in the virtual platform. Purchases are paid and money transfers done online and paid with virtual accounts. With all the tools that we have, is it possible for the world to transition from the traditional cash based monetary system to a cashless society?

Cashless and digital transactions are now commonly practiced worldwide. Countries like Sweden, India, and Belgium have taken steps away from paper currency. Sweden is aiming to be the first country to go 100% cashless. India demonetized in 2016 and 93% of Belgium’s population pay through cards and phone applications. They even created a law to limit cash transactions to 3,000 euro.

Based on studies, governments are losing approximately $200 billion due to fraud and corruption. This is what administrations and financial institutions are trying to eliminate. Blockchain technology offers a solution to combating these problems. Money transfer transactions processed through blockchain are recorded and authenticated. This prevents double payments and money laundering.

Hyder Jaffrey, head of Fintech Innovation, once said when asked about digital transactions, “You need a form of digital cash on the distributed ledger in order to get maximum benefit from these technologies.”

One of the most popular digital currencies is Bitcoin which was invented by Satoshi Nakamoto last 2007. Prior to Bitcoin, there have been other digital currencies circulating online but this currency went above the others as it solved problems of double spending through the use of a white paper. And by 2011, establishments already started accepting Bitcoins as a mode of payment. The industry continued to grow until 2015 where Coinbase, a company that caters digital transactions, raised $75 million worth of digital currency. It can’t be denied that from then on, companies have been benefiting from cashless transactions.

Jack Ma, a former teacher in China, decided to establish Alibaba, the first online wholesale marketplace which was originally based in Malaysia. Starting a business to business online shop was a huge risk especially with digital transactions just starting. But they slowly gained footing and earned investors. One year after it was launched, Alibaba already had $20 million worth of investments. And in 2001, Alibaba reached 1 million users.

Alibaba is noted as one of the largest and most influential companies to use virtual currency in their dealings. Realizing the cashless future of business and international money transfer, Alibaba invested and affiliated with the India-based Paytm. This proved to be substantially advantageous to the company, as supported by Julio Faura, head of R&D Innovation who said, “Today trading between banks and institutions is difficult, time-consuming and costly, which is why we all have big back offices”.

Another company who has been enjoying the advantages of cashless transactions is Voyagin. Established by Masashi Takahashi along with two other friends of his, Tushar Khandelwal and Hiroyuki Hayashi. He started by hosting guests from all over the world. This opened his interest and excitement to run a travel business. So, he developed a website that offers travelling tours and packages to people across the globe through a host system. The travelers pay Voyagin through their most convenient means, and Voyagin, in turn pays hosts electronically through CoinPip. Through this, Voyagin has established its credibility among frequent travelers while supporting digital transactions. Voyagin later merged with Rakuten, one of Japan’s largest marketplaces, which also runs Rakuten Travel.

Apart from its success, international money transfers through digital transactions have disadvantages too. Companies like Google and Apple are in a continuous war against hackers to protect user information. Google Wallet even had to temporarily suspend its services due to a hacking incident. Also, people without credit cards or bank accounts cannot take advantage of online transactions.

Here is an infographic detailing the shift from using cash to non-cash modes of payment in various regions around the world. North America leads the trend with more cashless transactions than cash. While Singapore, Netherlands, and France ranked among the least users of cash as transaction payments.

It used to be an impossibility to imagine a cashless society. People have been so accustomed to using physical currency that virtual transactions scare many of us. But as major companies across many industries have adopted digital payments, society is more exposed to its benefits. This new way of international money remittance eliminates risks presented by cash payments. Governments and financial institutions have started to support this change, leading us to the next generation of transactions without the need for cash as we know today.