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CASHLESS SOCIETY: NEW NORMAL?

CASHLESS SOCIETY: NEW NORMAL?

CASHLESS SOCIETY: NEW NORMAL?

Prior to the current pandemic, cash payments were becoming less pervasive in our society. Payments for merchandise, bills and services were increasingly being handled electronically, and payment systems were becoming more digitized. Today people are concerned about the safety of touching certain items and surfaces, making electronic payments a desirable way to affect transactions. Is cash really on the way out? Now that you can scan a payment from your smartphone or conduct your business all online, maybe cash is not necessary.

The idea of a cashless society may not be as far-fetched as you might think. Some businesses are already displaying signs that tell customers that they only accept tapped, scanned or credit card payments, thereby reducing the risk of transmission of the virus from person to person. Research shows cash payments are down at least 35 percent from last year at this time. For retailers, the use of electronic payments may increase the speed of a transaction and improve checkout times. For online bill payments, the use of digitized payment systems enables payments to be processed faster and more efficiently.

When the pandemic started and people began sheltering in place, many people withdrew large amounts of cash from their accounts. That, plus some consumers’ reluctance to transition to electronic payments may make the change to cashless business a bit slower than it might otherwise have been. However, with more businesses going cashless, those same people may be forced to adapt to the new normal.

By late March, about 27 percent or businesses reported a significant increase in cashless transactions, according to research from the Electronic Transaction Association. Other research shows that ATM withdrawals plunged between March and June. That indicates that the rapid transition to cashless payments may actually be consumer driven. Consumer use of mobile apps such as PayPal and Venmo has gone way up.

You may notice that many bank branches have closed, and there are fewer ATM machines. The cashless payment option is an advantage for banks, since retailers are charged a fee for each credit card transaction they make. Over time, these fees may decrease as the volume of cashless payments increases, but for now, some retailers are not satisfied with the cost of doing cashless business. A full transition to cashless payments is likely to take time, in spite of the current pandemic. Remember when you first had to pump your own gas? For a long time, people opted to go to the full-service pump, even when it cost them more per gallon. When ATMs first came on the scene, many people still preferred to pay with checks when they made purchases. These types of societal changes move slowly, but it appears we will eventually at least be a “less cash” society if not fully cashless.

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