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Are you ready for a cashless society?

A combination of the words “financial” and “technology,” FinTech is a relatively new term that applies to any emerging technology that helps consumers or financial institutions deliver financial services in newer, faster ways than was traditionally available. Digital Lending and Credit, Mobile Banking, Cashless Payment Systems such as Mobile Payments, Cryptocurrency & Blockchain, Insurance, Trading are a few examples.

With the worldwide pandemic of Covid-19, FinTech is becoming prominent by the day. How consumers pay for their purchases has been completely transformed during the last few years, and marketers expect this transformation to continue and expand. Such a transformation of the financial landscape will of course have profound implications for most businesses, the society and governments.

Rise of Digital Payments in e-Commerce!

The real-time accessibility of e commerce products and their availability of 24 hours a day, together with the ease of making electronic payments, are disrupting many aspects of traditional consumer shopping behaviour. This is also fueled by the widespread use of mobile devices and apps. With the digital payments industry maturing at an accelerated pace, shoppers will see new options with more features this year and beyond, as the retail industry prepares for the arrival of a fully cashless society.

Merchants who already were providing “buy online, pick-up in-store” (BOPIS) channels prior to Covid-19, experienced an increase of 70 percent by volume and 58 percent by value this year, according to a recent report by real-time payments provider ACI Worldwide.

A large majority of internet users, particularly those under the age of 45, shop online for clothes, sports goods, travel and online content such as games, videos and music are among the most popular items of the current e-commerce platform.

Global Landscape towards Cashless Societies:

The cashless trend is not universal even though it’s on the rise. Some cultures are still using cash at significant levels, so it is fair to take a country-by-country approach when exploring the expansion of digital payments and advancements of FinTech.

At the international level, China is leading in both e-commerce transactions and mobile cashless payments, with a population of over a billion consumers and due to the country’s three most popular mobile phone applications: WeChatPay, Alipay, and UnionPay. Opening up a world of convenient, instant and direct payments, these apps enable Chinese consumers to make most of their purchases through their smartphones.

Continuously emerging supergiant – India’s banknote demonetisation is driving change in one of the world’s biggest e-commerce growth markets as well, while Singapore is taking active steps to up its cashless game.

Sweden is expected to become the world’s first cashless country by 2023, with a wealth of cash-free spaces across the country. The Riksbank, Sweden’s central bank, has proposed the e-krona, a government-created cryptocurrency (named after the krona, the Swedish currency). This is a progressive step towards ensuring safety in the digital payment landscape with government-guaranteed means of payment without credit risk.

Even with such progress, a neighbouring country Italy still uses hard currency for 8% of their e-commerce payments due to a long standing distrust of electronic forms of cash.

Given these cultural shifts, it is evident that the approach towards a true cashless society is not without resistance, and merchants and regulators will need to work hard to reassure customers about payment security and prevent the challenges related to cybercrime, fraud, privacy, the digital divide and pollution, among others.

Cash transactions are still necessary for many global citizens, and will continue to be so for some time. However, the opportunities that e-commerce and cashless transactions afford in terms of convenience, efficiency and affordability will help them gain further ground in the years to come with their popularity among younger generations steadily on the rise.

All the benefits that a cashless world presents make it an eventual inevitability – it’s just going to take time to get there.

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