Will society be cardless before it’s cashless?

You don’t have to look far to find a study, survey or expert proclaiming the death of cash. The evolution of digital technologies means people can pay for goods and services with a swipe of their card, a flick of the phone or even by waving their watch.

It’s perhaps not difficult to see why, in comparison, cash seems an old-fashioned way to complete everyday transactions – leading many people to predict its demise.

Recent figures showed 68 per cent of individuals polled in the UK thought cashless technologies would replace physical money within 20 years. Similar results arose in a 2015 Lloyds Banking Group survey, with 25 per cent of consumers believing they wouldn’t need cash to pay for purchases by 2020.

“Whether it is contactless, wearable tech or fingerprint ID, people are increasingly expecting to use new technologies to make payments rather than rely on cash,” Claire Garrod, head of personal current accounts at Lloyds Bank, said at the time.

Do these innovations really mean the death of cash? Not necessarily. In fact, some people predict that societies are more likely to become cardless before they become cashless. Why would this be? First, let’s look at an example of how cash and card use is changing in certain countries.

Swedish cash and card trends

Sweden is among the nations leading the charge in moving towards a cashless society. Figures from the country’s central bank, Riksbank, revealed that only 20 per cent of people’s transactions were cash-based in 2014, having dropped from 39 per cent four years earlier.

The institution revealed that 93 per cent of Swedes had used a card as a payment method in the last month, while 87 per cent said they’d paid in cash.

“I think, in practice, Sweden will pretty much be a cashless society within about five years,” Niklas Arvidsson, an associate professor that specializes in payment systems at Stockholm’s Royal Institute of Technology, told the Guardian in June.

Nevertheless, even Mr Arvidsson feels a completely cashless society would be a huge step, as it would require difficult decisions being made at the political level.

“The idea of cash, even in Sweden, remains very strong,” he added.

But how could a country like Sweden become cardless before cashless? Especially considering how ubiquitous card use is among Swedes?

The benefits of cash

Cash transactions appear to be declining, but there are a number of reasons why we could see the demise of cards before physical coins and notes disappear.

First, cash offers an anonymous and universally accepted means of payment. Many merchants offer a range of digital payment options, but people often know their cash is always going to be good, wherever they shop in person.

Furthermore, unbanked and underbanked individuals who don’t have access to traditional financial services may find cash is their only meaningful way of making purchases. Crucially, coins and notes can also be used when technology breaks down or power outages occur.

On the other hand, most forms of digital payment are somewhat amalgamated, which means that while they differ in execution, many rely on similar underlying frameworks, devices and technologies.

This means cards could quickly be usurped by alternative payment methods in the future, whether it’s mobile phones, cryptocurrency, wearables or even microchip implants.

Ultimately, cash provides consumers with various unique benefits that other payments are unable to deliver. So while cards may be in the ascendency now, there’s a convincing argument to suggest they could die out before physical money.

Written by Cleopatra Mavredis

Cleopatra Mavredis

Cleopatra is NCR’s Global Marketing Manager for Channel Solutions and has more than 20 years of experience in the ATM industry. NCR’s channel solution portfolio is comprised of APTRA Vision, Inetco Insight and OptiSuite solutions.

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