Topic Name: How World moving towards Cashless society
Presented By
Pooja Rajput (1st yr MMS)
JDBIMS
Abstract:
A cashless society describes an economic state whereby financial transactions are not conducted with money in the form of physical banknotes or coins, but rather through the transfer of digital information between the transacting parties. Cashless societies have existed from the time when human society came into existence, based on barter and other methods of exchange, and cashless transactions have also become possible in modern times using credit cards, debit cards, mobile payments, and digital currencies such as bitcoin. However this article discusses and focuses on the term “cashless society” in the sense of a move towards, and implications of, a society where cash is replaced by its digital equivalent—in other words, legal tender (money) exists, is recorded, and is exchanged only in electronic digital form.
Objective:
• Focuses on the actions which are moving towards cashless society.
• To study Advantage and disadvantage of cashless society and major
concern arises from it.
1 .Introduction:
Our respected prime minister announced the “Go digital go cashless india ‘’after the demonetization in 2016 it was first step towards making the dream of digital India a reality. During the covid 19 pandemic, cashless transaction performed the most for contactless payment. Cashless payment via digital systems, a recent implementation of e-commerce, refers to a smart payment alternative in several developing countries to gain sustainable competitive advantage . Consumption and consumer behavior are crucial factors in societies, particularly during the coronavirus disease 2019 (COVID-19) outbreak in 2020. Digitalization has been a major factor of consumer’s behavior that has led to new ways of living. With the increasing adoption of online services, electronic payment has become more trustworthy, along with the expansion of the range of suppliers and the size of their delivery networks. The emergence of digitalization through the Internet has accelerated the flow of globalization and payment systems from manual to online transactions. This has led to the dependency on electronic money (e-money) usage in performing transactions.
2. Research methodology:
The articles related to the problem have been taken from proquest peer reviewed journals.
3 . Countries that adopt cash less method
Mohannad, A. D., et al found that Fintech and cashless Sweden is considered to be one of the top cashless countries in the world, only 2% of transactions are processed in cash (Weller, 2016). Many other countries, such as Finland, the UK, Australia, China, Norway, Denmark, Belgium and South Korea top the cashless countries in the world . Through the experience and practice, the countries adopted the usage of financial technology in their financial transactions to avoid cash payments in different aspects of business. Contactless payments are one of the top cashless methods that people use to fulfill their financial payments. In March 2020, the vice president of the European Commission for financial services has written on his own Twitter account that “Time to swap your coins for payment cards – safer for containing coronavirus.” The vice president also supported the banking authorities in Europe for their initiatives to facilitate the usage of the contactless payment methods .
4. Highest use of smartphones:
The Middle East has recently seen an exponential growth in the adoption of smartphones and mobile payment solutions. According to Deloitte’s Global Mobile Consumer Survey , two Middle Eastern regions, namely, the Kingdom of Saudi Arabia and the United Arab Emirates have the highest smartphone penetrations at 97% compared to other countries. In addition, 40%, 22%, and 24% of users in the Middle East use mobile payments offered by banks, Telecom providers, and other organizations respectively. Moreover, the recent COVID-19 pandemic has further accelerated the push towards such solutions in the Middle East . For instance, the Saudi Arabian Monetary Authority recently established its payment infrastructure to encourage cashless payments (e.g., STC Pay) in order to reduce physical contact among customers and merchants. Other examples of mobile money services deployed in the Middle East include BenefitPay in Bahrain and Orange Money in Jordan and Egypt.
5. Context of the Adoption of e-Wallets in Indonesia
The growth of the Internet in Indonesia had driven e-commerce from 2013 to 2020. The number of e-commerce users in Indonesia increased from 34% of the total population in 2015 to 53% in 2020 . Indonesian consumers are very receptive towards new products within the digital economy sector. The growth of the market for fintech products in Indonesia has displayed an upward trend, evidenced by the increment in transaction value and the number of start-ups . Recent data revealed that digital payment transactions for the last three years exhibited an escalating trend with Rp (Rp-Rupiah, Indonesian Currency. 1 USD = 14,197 Rp) 56 trillion in 2019, Rp 47 trillion in 2018, and Rp 12 trillion in 2017. E-money or e-wallet payments are the most popular form of fintech services in Indonesia, followed by web-based investment, and pay-later services. E-money transactions in Indonesian retail market rose by 173% in January 2020 from the previous year due to the rapid adoption of a cashless environment. Astonishingly, e-money transactions hit Rp 15.8 trillion in January 2020 alone.
6. The Apple Pay mobile payment system:
Liébana-Cabanillas et al stated that the most-used mobile payment application in Spain (26%) Based on the study, it can be said that, in the context of the current digital transformation of business, mobile payment and wallet apps like Apple Pay are capable of generating positive impacts in all of the five main business strategy domains that were proposed by Rogers: customers, competition, data, innovation and value.
7. The Use of Mobile Payment Services in the Tourism Sector
Suyunchaliyeva, M. M., et al The hospitality and tourism sector is considered a significant revenue-contributing sector for a country. This sector consists of airline companies, tour operators, hotels, the sharing economy , car rentals, tourist attractions, shopping malls and restaurants. In the wake of the pandemic, introduced a ‘new normal’ consisting of new standards and protocols to promote tourism and safe travel. Aside from improved hygiene and social distancing, these included the use of contactless mobile payment systems. It has been widely acknowledged, however, that the slow growth in mobile commerce, including mobile payment services, can harm the hospitality and tourism sector and impede its growth. According to the 2021 Hospitality Industry Trends report released , contactless payment systems and their widespread use are indispensable to the hospitality and tourism industry’s survival and growth. This is because of such systems’ added efficiency and effectiveness and the useful innovation they introduced in the aforementioned sector.In the aforementioned reports, a strong correlation is found between the hospitality and tourism sector and mobile commerce. Mobile commerce, of which mobile payment is an integral component, is essential to the growth of tourism, and this direct relationship became more stringent after the COVID-19 debacle.
8.Major concern Digital fraud :
When payment transactions are stored in servers, it increases the risks of unauthorized breaches by hackers. Financial cyber attacks and digital crime also form a greater risks when going cashless. Many companies already suffer data breaches, including of payment systems.Electronic accounts are vulnerable to unauthorized access and transfer of funds to another account or unauthorized purchases.
9 .Problems for the unbanked
Cashless systems can be problematic for people who currently rely on cash, who are concentrated in certain populations such as the poor, disabled, elderly, undocumented immigrants, and youth.Electronic transactions require a deposit account and some familiarity with the payment system. Many people in impoverished areas are underbanked or unbanked.In the United States, almost one-third of the population lacked the full range of basic financial services in 2012. In 2011, an FDIC survey found that approximately one quarter of households whose annual income was less than $15,000 had no bank account.. Nationwide, 7.7% of people in United States did not have bank accounts, with levels over 20% in some cities and rural counties, and over 40% in some census tracts, as of 2016.
As part of its Smart Nation initiative, Singapore has been moving towards a cashless economy. In 2017, 14.4% of the country’s population was over 65 years old, and the majority of seniors still used cash as their only method of payment. Not used to digital payment methods, troubleshooting issues such as managing lost cards or passwords and managing their expenses can create potential trouble for anyone transitioning from cash.
10. Sergio Luis Náñez Alonso stated some advantage and disadvantage
Advantages of Eliminating Cash
• Greater ease of the central bank to apply monetary policy.
• Higher collection of the state, when “transactions” from the
underground economy emerge.
• Crime reduction: Money laundering crimes, tax evasion and other
illegal activities such as drug or arms trafficking.
• Technological innovation: new means of payment and official virtual
currencies.
• Greater physical security for businesses, avoiding robberies since they
do not have cash on their premises.
• Cost savings in issuing banknotes and coins.
Disadvantages of Eliminating Cash
• Absolute dependence on electronic means for payments: network
outages, power outages etc.
• Increase in inequality I: Exclusion of unprofitable clients for financial
institutions.
• Increase in inequality II: Difficulty in making transactions on the part of
the elderly, people with disabilities, poor people with problems
accessing bank accounts, etc.
• Privacy problems: access to data and customer transactions when
everything is registered.
• Security problems: Hacking and theft of customer data.
• Financial instability problems.
Conclusion:
From given study I found out that cash less society is developing mostly from the time of covid 19 pandemic arrived. People mostly preferred contactless means cashless payment method such as e wallet, UPI, digital currency(bitcoin) etc. for doing financial transaction. From study I learnt that if we do all the transaction online it will reduce the risk of tax evasion and corruption. Digital transaction will make our economy more transparent. For making a cashless society, from study I found a recommendation for the banking sector and software firm enabling the digital payment should be user friendly or easy to use through user friendly website interface. There are many advantage and dis advantage of cashless economy but it need of todays world. We should make people aware about digital payment system so that they can use it easily get benefit from that. It is challenging for the group of people who does not have there bank account so it required more effort to make them aware about the digital transaction.
References:
Suyunchaliyeva, M. M., Nautiyal, R., Shaikh, A. A., & Sharma, R. (2021). The use of mobile payment systems in post-COVID-19 economic recovery: Primary research on an emerging market for experience goods. Sustainability, 13(24), 13511. doi:http://dx.doi.org/10.3390/su132413511
Sharma, V. (2021). Examination of service quality of digital payments among working professionals. Turkish Journal of Computer and Mathematics Education, 12(9), 777-783. Retrieved from https://www.proquest.com/scholarly-journals/examination-service-quality-digital-payments/docview/2623461737/se-2
Liébana-Cabanillas, F., García-Maroto, I., Muñoz-Leiva, F., & Ramos-de-Luna, I. (2020). Mobile payment adoption in the age of digital transformation: The case of apple pay. Sustainability, 12(13), 5443. doi:http://dx.doi.org/10.3390/su12135443
Privacy policy analysis of banks and mobile money services in the middle east. (2021). Future Internet, 13(1), 10. doi:http://dx.doi.org/10.3390/fi13010010
Cashless transactions: A study on intention and adoption of e-wallets. (2021). Sustainability, 13(2), 831. doi:http://dx.doi.org/10.3390/su13020831
Sergio Luis Náñez Alonso, Jorge-Vazquez, J., & Ricardo Francisco, R. F. (2020). Detection of financial inclusion vulnerable rural areas through an access to cash index: Solutions based on the pharmacy network and a CBDC. evidence based on ávila (spain). Sustainability, 12(18), 7480. doi:http://dx.doi.org/10.3390/su12187480
Rogoff, K., & Scazzero, J. (2021). COVID CASH. Cato Journal, 41(3), 571-592. doi:http://dx.doi.org/10.36009/CJ.41.3.6
Mohannad, A. D., Constantinovits, M., Arqawi, S., & Daragmeh, A. (2021). The role of fintech in predicting the spread of COVID-19. Banks and Bank Systems, 16 2021(1), 1-16. doi:http://dx.doi.org/10.21511/bbs.16(1).2021.01