Even five years before the pandemic, the ‘death of cash’ had long been predicted –due to the growing use of credit and debit cards.

Post-Covid, and the global consumer finance ecosystem is being further catapulted along that path.

The acceleration towards a cashless society has been fuelled by the pandemic shift that we saw in online retail.

Cashless society is becoming viral:

Consumers were actively encouraged not to use cash to prevent the spread of the virus and trust in digital banking products has soared.

Even if most consumers in the UK and US still use cash to pay for at least ssome of their purchases, according to new YouGov research, the generational writing is on the wall.

The YouGov figures show that 42% of over-55s in the UK say they like to use cash when purchasing, while only 31% of 18 to 34-year-olds prefer to do the same.

In 2020, Mastercard reported a 40% increase in contactless payment transactions globally. That trend looks set to continue as providers and consumers overcome privacy and security issues. Eventually it looks likely that central banks will play a bigger role in closing the gap, too, through the development of central bank digital currencies (CBDCs).

And it is clearly in the interest of governments to facilitate the switch to cashless. Non-cash transactions get registered in banks, improving transparency and helping in lowering tax evasion and money laundering, in a way that cannot be done with the same degree of accuracy as with ‘grey’ paper cash.

Cash is no longer king:

Contactless cards, mobile phone payment systems and advances in biometric identification also point to the fact that the convenience and appeal of ‘real money’ will wane.

Not all societies are moving at the same speed however.

In Japan most people still like to use cash. In China, though, almost all payments have gone digital via China’s dominant digital payment apps, Alipay and WeChat.

China’s quick response (QR) code payment service has also taken off. In order to pay, the buyer scans a code from the seller, shows them a confirmation on their smartphone screen, and payment is made.

In the UK and US, apps such as Apple Wallet, Samsung Pay and Google Pay are increasingly gathering ground. All major credit cards work with them – and even airline tickets do too.

Moving to a fully cashless society for any country is dependent on its level of technology penetration and security advancement – and of course, the great cashless enabler of internet penetration.

Many developing countries are proving to be slower in cashless adoption, mostly because they have lower technology penetration and weaker financial inclusion and literacy.