The use of coins and banknotes has been declining worldwide over the past years. In 2021, cash payments accounted for only 18% of the global transaction value, and their share is expected to drop even more - down to 10% already by the end of 2025.
Such a major shift could not go unnoticed and is affecting the payment industry in every corner of the planet. In this overview, we’ll uncover the details about the current state of physical money, explain which payment methods are outperforming it, and answer the big question: is the world ready to go cash-free?
Just a couple of decades ago, it was hardly possible to imagine the world without physical currencies. While bank cards and digital payment methods have been around for quite some time, cash remained king for many years.
However, the coronavirus outbreak that started in 2019 has turned the world upside down. The social distancing and hygiene measures that were introduced to prevent the infection’s spread have changed the way businesses operate and payments are made.
During the peak of the pandemic, the majority of businesses were mainly accepting orders and processing transactions online, with bank cards and eWallets stepping up as the top payment methods.
The changes accelerated by the COVID-19 pandemic have brought society closer to the concept of a cashless economy than ever before. But is it a shift for the better?
Let’s take a look at the potential advantages and drawbacks of living in a cash-free society:
According to payment industry experts, the key benefits of getting rid of hard cash include:
Regardless of all the benefits, there are certain challenges a society that decides to go cash-free would face:
As you can see, the shift toward a cashless society has its complications. However, as practice shows, they are not weighty enough to stop some countries from the decision to leave tangible money behind.
In 2023, Sweden will become the first cashless society in the world, with its economy going 100% digital.
What’s more, the whole population in Sweden has mobile coverage, which allows for a smooth transition to digital payments for all the country’s residents.
In 362 years, Sweden has made its way from being the first country in Europe to adopt banknotes in 1661 to becoming the world's first cash-free nation in 2023.
At the moment, the top five countries that are the closest to going cashless, following Sweden, are:
The pandemic has already played a decisive role in opening up the payments landscape and boosting the presence of digital transactions. Thus, it's critical for businesses not to underestimate the likelihood of further changes in the foreseeable future and aim to diversify the number of cash-free payment methods they offer.
At Payneteasy, we are here to help you to maximize your payment processing capabilities and get you ready for any major shifts in the industry from a technological and regulatory perspective. Our tailor-made solutions provide you with the flexibility to accept local and international payment methods on a one-time or recurring basis so that you never lose any business opportunities.
Reach out to us today for a custom payment solution!