For some time, we've known that the world is heading towards a
cash-free society, as the lure of digital technology causes us to toss our
pennies to the bottom of the economic well. However, with changing spending
habits, in the midst of a global pandemic, could this future be more imminent
than we ever imagined?
It's only four months since Covid-19 entered our lives and
already, it has totally mutated our financial security. Across the globe,
economies are slumping; unemployment is soaring and major retail giants are
falling like dominos into administration. Yet, there are some positives that
can be reaped from this unprecedented situation. Due to social distancing and
work-from-home protocols, it has fostered a new found appreciation for
technology. And it's not just our current working conditions, which are
propelling us towards a more tech savvy world; it's our spending habits too.
Following warnings, issued by the WHO, about the transmission of
Covid-19 via bank notes and coins, we have seen numerous measures to endorse
cashless payment methods. In Sweden, trade union Kommunal has been lobbying for
a cash ban on all public transport. Meanwhile, earlier this month, UK
supermarkets announced an increase in the contactless limit to £45. One must
also acknowledge the effect this pandemic is having on global consumer
behaviour. As billions self-isolate, E-commerce appears to have outshone
in-store purchasing, casting doubts upon the survival of the high street. A
report from the analytics firm Contentsquare showed a 221% growth in
transactions on UK supermarket sites, during the week commencing March 29th.
Moreover, according to marketing platform Emarsys and analytics platform
GoodData, online orders among primarily store-based retailers were up 56% in
North America, 82% in Asia Pacific and 71% in Western Europe year-on-year
during the two week period between March 22nd and April 4th.
Of course, the prospect of a global cashless society is nothing
new in the world of economics. For decades, nations have been preparing for the
shift and competing to claim the grand title. Sweden, a text-book contender,
has long since dominated the conversation, with the 2009 Vastberga Heist
echoing its anti dosh parable. Just 1% of the Swedish GDP circulates in cash,
which, as of this February, has prompted The Riksbank to launch testing of the
e-krona. And they're not the only ones embracing digital currency. China,
another vanguard in fintech and E-commerce, have drafted laws for the E-yaun.
Stateside, the House of Democrat has also recently rolled the monopoly dice,
this time passing a $2.5 trillion Coronavirus stimulus bill which will
establish a digital dollar.
In conjunction with cryptocurrencies, the mobile banking eco
system is booming. Most notably, according to a McKinsey global report,
published last year, banking in Africa is "a hot-bed of innovation",
with 40% of Africans surveyed, favouring digital channels for transactions.
Despite the efficiency, convenience and reduced cost, there are drawbacks to
becoming too tech reliant, which could be set to sour the cashless dream. Not
only do they require a Wi-Fi connection, online payments run a higher risk of
account hacking and data breaches. Andrea Enrea, chair of the ECB's supervisory
board, warned that Coronavirus could trigger a surge in cyber security related
fraud and scams. Furthermore, companies' IT systems could be put under strain
by a higher reliance on remote banking.
During such uncertain times, nobody knows what the future holds.
Nevertheless, one thing is for sure: Coronavirus will leave a permanent imprint
on our lives from the ways we work, educate and spend our money.
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