While many are aware of an active pursuit of a cashless society, not as many know about the benefits that it can bring to society as a whole. On top of paying through cards, apps and mobile wallets, the maturing digital currencies should not be left out of the cashless equation as well. The pros brought about by a cashless payment system benefits not just the users, but also the merchants and the government.
- Better usage of time and money
Efficiency can be achieved when low-value and manual work are removed from business operations. Many have the misconception that cash transactions are ‘free’ since there are no additional charges unlike credit card transactions and the ilk. However, in Ireland alone, the government estimates that about 1.4% of its Gross National Product (GNP) is spent on the production, administration and security for cash and cheques. When you print bills and coins, or process cheques, money is incurred. The managing of cash from storage, to deposits, to withdrawals all take time and money as well.
- Access to more quality data
Using lesser cash equates to getting more good quality and accurate data on transactions. Through electronic payments, public officers can analyse trends better to help improve policies as well. Not only can the payments now identify parties involved in the transaction for traceability, it can also predict commercial activity patterns. All these ideally translate into more responsible and accountable citizens, economic prosperity, a better provision of products and services, as well as a more inclusive and sustainable urban planning. Needless to say, maintaining privacy amidst all these complex data exchanges will be an important point of consideration. Protecting the data at various data points is also crucial.
- Prevention of cash theft
Being cashless leaves behind a record of paper trails. It is hence more difficult to hide income or evade taxes with the increased transparency. The system keeps the transacting parties responsible. While newer methods of crime such as fraud, identity theft and online scams are undeniably evolving with the introduction of a cashless society, the benefits of leaving a paper trail is still important in eliminating cash theft as well as burglary and assault that often comes with it.
- Boost to economic growth
The ease that comes with card spending typically increases the consumption rate, which will then lead to economic growth. While this can be contributed by the perception of an increased spending power, it is also very much about human psychology and the pain felt during each payment. When you have to physically give up cold, hard, cash, you are forced to think about the sum of money forked out. Swiping a card, on the other hand, can be mindless. The payment comes at the end of the month when the accumulated credit card bill arrives.
The economic growth brought about by spending e-money may even lead to more job opportunities to meet the demand. In light of this, education about overspending and debt needs to be actively taught and enforced.
Case studies in Singapore China and Sweden often come to mind when one thinks about successful cashless societies. While Singapore has much to learn, she is not way too far back.
Take fundraising as an example. Instead of the collection of cash via tin cans, the National Council of Social Service has tried to raise funds for the Community Chest during large community events through e-money means. The familiar EZ-Link cards can be used to make a donation by scanning it at the terminal built into MRT station posters and mobile card readers.
In Singapore’s hawker centers, an industry task force, SGQR, has been pushing the development of a common QR code for Singapore to further push e-payments. The company also aims to have a standardised QR specification in order to accept both domestic and international payment schemes. For instance, the use of QR codes to enable payment was established in a bid to simplify the switch. Since QR codes do not need merchant terminals, capital and maintenance costs are reduced. It also takes up lesser space. While stallholders and consumers are still a tad hesitant to use QR codes due to perception issues, this is a great step forward towards going cashless.
PayNow, an instant fund-transfer system, allows users to transfer money by keying in the recipient’s phone number or identity card number in many bank’s apps, not limited to DBS PayLah, UOB Mighty and OCBC Pay Anyone. This highly integrated and convenient way to transact has unsurprisingly been catching on quickly, with The Business Times reporting that Paynow corporate is seen as a game changer in Singapore’s cashless drive. Singtel Dash, on the other hand, serves as a stored-value card, and can also be accepted at all many Visa payWave contactless payment terminals.
While privacy concerns, hacking, technological complications, overspending and exploitation of large cashless companies are definitely factors to take note of when pursuing a cashless society, this is a much-needed shift for Singapore, the region, and the world. On top of being aligned with the national push towards the Internet of Things (IoT) and big data analytics, going cash-free can liberate the individual and catalyse efficiency. Although it takes some getting used to, the benefits will likely outweigh the costs in time. As a consumer, perhaps it is wise to start learning how to be cashless to stay relevant and in the know.
Research completed by Yahoo Finance. Full article here.