Is a cashless society a good thing?

Is a cashless society a good thing?

There are two different approaches on the matter of cashless society. 

According to Charlie Sorrel of the magazine Fast Company, we were cashless before and we will be cashless in the future. The U.S. government did not issue banknotes until 1862. Before that, people paid for goods and services with a mix of government-minted coins and currencies issued by private banks. Now cash is on its way out, accounting for just 40 percent of payments in 2012 and falling. 

There are many benefits to removing cash from the economy, such as eliminating black markets and allowing more easy monetary policy. But there are also concerns when every single transaction can be monitored, examined, or manipulated. But regardless of where you fall on the debate, one thing is clear: As online shopping becomes yet more prevalent, and prepaid credit cards take the place of more and more low-value cash transactions, cash is well on its way to becoming obsolete.

Sweden is the leading country of being a cashless society. However a recent call from the Swedish Central Bank confused many. The bank proposed making it a legal requirement for banks to provide cash services. It is thought that the reason for this call is the fact that approximately 50 percent of bank branches are now cashless, meaning that at some places you cannot even make a deposit or withdrawal.

Eveaa Haaramo wrote that the call to make using cash a legal right for consumers will create question marks in the minds of other central banks and players in international markets, raising “some concerns” about a completely cashless society. Haaramo wrote that Dr. Soner Canko, the CEO of Turkish card payment system operator BKM, told attendees of panel session at Money 20/20 Europe that “the Swedish central bank announcement is going to be huge.” 

“Sweden is one of the flagship markets around the world. I’m afraid that this announcement is going to create more and more question marks in the minds of other central banks and other players in international markets as well. This is going to create some concerns about a cashless world. A cashless society is good for the modern life and good for the economy,” Canko said.

“Our situation is a little bit different to other markets,” Canko added, explaining Turkey’s approach. “Since the year 2010, we have a program called ‘Bye Bye Cash.’ We have certain initiatives such as debit card usage increase, contactless encouragement, and mobile payment incentives. All these actions are under this umbrella. We made quite significant progress over the past five years because of this powerful synchronization. At the end of the day, we will become one of the cashless societies in the coming 10 years.”

Turkey is a bold country in some ways, and we have learned now that we are extremely bold on the issue of going cashless. We have Sweden on the doubtful side and Turkey on the fast-track side. We will see which approach is better in the coming years.