“Money” by free pictures of money is licensed under CC BY 2.0
“Money” by free pictures of money is licensed under CC BY 2.0

How businesses will be impacted by moving towards cashless money systems?

Square is a company who provides readers that allow sellers to accept contactless cards, chip credit cards, Apple Pay and Google Pay.1 Square found that on April 23, 2020, 31% of U.S. sellers who utilized their platform had accepted 95% or more of transactions through credit or debit card.2 COVID-19 had caused card usage for transactions between $10 to $20 to increase by 2% in one month, which is much quicker than the previous five months.3 Other countries apart from the United States have also seen an increase in cashless payments. Australia saw a 30% increase compare to before the pandemic.4 Canada saw a 39% increase and Great Britain saw a 50% increase.5 Wakefield Research found that 69% of small business owners thought that the COVID-19 pandemic would accelerate the usage of cashless transactions in the United States.6 This isn’t to say that cash will disappear entirely though. 85% of small business owners said that they would never stop accepting cash.7 The chart below shows the growth of cashless businesses by industry.8

Growth of cashless buisnesses by industry
Growth of cashless buisnesses by industry
Many countries have seen a large increase in the percentages of cashless businesses.9 Businesses who fail to adapt to the change in how people pay may suffer. 85% of consumers are likely to walk away from a business if they are unable to use their preferred method of payment.10 The complete movement from cash to digital can also hurt businesses. There are millions of Americans who don’t have bank accounts.11 By moving to a completely cashless society many of these individuals will need to rely on high-interest products that could cause further financial instability.12 Sweden is a country which has been moving to a cashless society at a fast pace.13 In 2018, about one in ten consumers used cash to purchase something in that year.14 The usage of cashless payments among those between the ages of 18 to 24 was 95%.15 The efficient use of employee time may increase with the switch to cashless commerce. An Ikea in Gävle switched to cashless payments and found that fewer than 1% of shoppers used cash and that Ikea employees spent 15% of their time handling, counting and storing money.16 China has also begun moving to a digital currency. With the government directly monitoring the wallets of businesses and individuals, the central bank might be able to directly provide support instead of lowing interest rates.17 The move to a cashless society can help businesses increase the efficient use of employee time, but those who fail to adapt may lose many of their customers.


Bibliography

Alderman, L. (2018, November 23). In Sweden, cash is almost extinct and people implant microchips in their hands to pay for things. Retrieved from Financial Post: https://financialpost.com/news/economy/swedens-push-to-get-rid-of-cash-has-some-saying-not-so-fast Browne, A. (2021, February 20). Bloomberg New Economy: China Cashless Economy and Surveillance. Retrieved from Bloomberg: https://www.bloomberg.com/news/newsletters/2021-02-20/bloomberg-new-economy-china-cashless-economy-and-surveillance Holzhauer, B. (2020, October 22). The Pandemic Is Fast Forwarding Us To A Cashless Society—And Making Life Harder For The Unbanked. Retrieved from Forbes: https://www.forbes.com/sites/advisor/2020/10/22/the-pandemic-is-fast-forwarding-us-to-a-cashless-society-and-making-life-harder-for-the-unbanked/?sh=4b39ee2a7f1f Square, Inc. (2020, June). Making Change Chapter 2: Payments and the Pandemic. Retrieved from Square: https://squareup.com/us/en/making-change/2020/1 Square, Inc. (2020, September). Making Change Chapter 3: The New Normal. Retrieved from Square: https://squareup.com/us/en/making-change/2020/2 Square, Inc. (2021). ABOUT US. Retrieved from Square: https://squareup.com/ca/en/about Square, Inc. (2021, March). Making Change Chapter 4: One Year of Payments and the Pandemic. Retrieved from Square: https://squareup.com/us/en/making-change/2021


  1. (Square, Inc., 2021) ↩︎

  2. (Square, Inc., 2021) ↩︎

  3. (Square, Inc., 2021) ↩︎

  4. (Square, Inc., 2021) ↩︎

  5. (Square, Inc., 2021) ↩︎

  6. (Square, Inc., 2021) ↩︎

  7. (Square, Inc., 2021) ↩︎

  8. (Square, Inc., 2021) ↩︎

  9. (Square, Inc., 2021) ↩︎

  10. (Square, Inc., 2021) ↩︎

  11. (Holzhauer, 2020) ↩︎

  12. (Holzhauer, 2020) ↩︎

  13. (Alderman, 2018) ↩︎

  14. (Alderman, 2018) ↩︎

  15. (Alderman, 2018) ↩︎

  16. (Alderman, 2018) ↩︎

  17. (Browne, 2021) ↩︎