Cashless Transactions Are the New Normal After COVID-19
The trend of cashless transactions has greatly increased since the outbreak of the coronavirus pandemic. Although experts are not that confident about the spread of the virus through cash and paper, people aren’t taking any risk. On top of that, due to lockdown, online shopping and home deliveries have been the only method of buying necessary goods. Cashless transactions are more common in the field of e-commerce.
Numbers Don’t Lie
The digital payments sector is the largest segment in the area of financial technologies or Fintech. According to Statista, the transaction value of worldwide cashless payments is expected to reach up to 6 trillion US dollars in 2021. This will be a 40% growth in just two years. The largest market segment will be digital commerce, which will value up to 4 trillion dollars. Similarly, point of sales (POS) payments will contribute up to 2.5 trillion dollars in value in 2021.
As of now, China sits on top of the digital payments industry with a transaction value of up to 2.9 trillion dollars followed by the United States. Likewise, Europe is where this technology is growing at the fastest pace.
Younger Generations Leading the Way
The craze of cashless transactions is more observed in the younger generations. There are various reasons why this is true. First, most of them grew up in a time when the Internet and electronic commerce are booming. The second is the popularity of smartphones. Since the younger generation spends most of their time on mobile phones and computers, cashless transactions came as a convenient option. Most importantly, cashless transactions are not only a practice of the people in big cities with a higher quality of living. Developing countries are also major participants in this global shift.
How Cashless Compares to Traditional Methods
So why are cashless transactions dearer among a huge chunk of the global population who will be the largest buying group in the future? In the following paragraphs, we will discuss how cashless is more secure, efficient, and productive in this heavily connected world.
Cash is Risky
One of the primary reasons why cashless edges over traditional cash transactions is security. Carrying physical cash has some risks like getting robbed or losing/ forgetting the money. On the other hand, cashless technology makes sure that your transactions are very secure. Even if you lose your phone somewhere, you may not lose any money because of strict authentication requirements. However, remember that cashless is not flawless. If you are not careful about the storage of your passwords and authentication codes, it will be just as risky.
Ease and Speed of Use
The ease and speed of use of cashless transactions are unrivalled by other traditional methods. With a simple touch of a finger in your phone’s fingerprint sensor, you can pay for a multitude of things. Similarly, you do not have to wait for the printer to print your bills. All the details about the transactions can be obtained as a PDF document.
Monitor Your Spending
One of the benefits of cashless transactions that often sweep under the radar is the ability to monitor your spending. If you use cash, you will not remember where your money is spent the most. Likewise, without proper tracking, you cannot form good spending habits. On the other hand, digital payment applications can help you budget, track, and monitor your spendings. Therefore, you can always set your goals and limits and maintain a good spending and saving habit.
Discounts and Loyalty Points
With a lot of discounts and reward points, cashless transactions are more attractive than dull, traditional payments. This is because governments, merchants, and service providers are encouraging people to go digital as it is more secure and convenient for them.
The Covid-19 Push for Cashless
Covid-19 came at a time when cashless was already taking new heights and accelerated its growth further. The following are the major reasons why we saw a drastic increase over the past two years.
The Only Option
As governments put strict restrictions on the movement of people, digital transfer of money was the only option for millions of people. Digital wallets facilitated the transfer of money between friends and families and for those in need. Likewise, buying groceries and other necessities was only possible through online shopping and home deliveries. Since people were adamant about contact with each other, cashless transactions filled the void.
Businesses Promote Cashless
In the wake of the global pandemic, multiple businesses in multiple industries encouraged cashless transactions. In some places, cash was not even accepted. For example, the Metrolinx transit agency put a full stop on cash payments to help the spread of the virus and protect their staff. Likewise, the Louvre Museum in Paris banned cash payments for the same reasons.
Governments Promote Cashless
One of the reasons why cashless transactions will see more adoption in the future is the promotion by governments themselves. The Government of India is promoting digital payments to make them accessible, convenient, and secure for all of its citizens. Likewise, the Malaysian government is providing incentives for its citizens to favour contactless payments. Similarly, Singapore wants to be a leader in a movement that is sure to take pace in the recent future.
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In this blog, we came across the reasons why cashless transactions are seeing significant growth over the past few years. Likewise, we looked at the numbers across different regions, sectors, and markets in the world. Similarly, we saw how the younger generations who grew up in an Internet age are leading the way to a cashless future. Furthermore, we compared cashless transactions with traditional cash-based transactions and saw how it is more secure, easy, and convenient.
Top World Business is a one-stop place for all the business news from every corner of the globe. Our aim is to keep you updated on recent and future business trends so you can use them to your advantage. Contact us if you have any further queries.