Once upon a time, cash was all we knew. And now I barely remember the last time when I did offline shopping and paid in cash. It seems like ages. We are in this cashless society with digital payments and virtual wallets in our hands.
Well, countries like Sweden are already working to remove the cash in circulation. In Sweden, almost 900 out of Sweden’s 1600 bank branches don’t accept cash, and busses haven’t taken money for years now. Isn’t it interesting? Hence Sweden is known as the pioneer of the cashless society.
According to Statista, in 2018, around 195.4 billion U.S. dollars cashless transactions were conducted in Asia-Pacific, which is higher than any other region. At the same time, Europe and North America followed with 192.2 and 170 billion U.S. dollars in transactions, respectively.
By 2023, Europe is expected to exceed North America, and Asia-Pacific is expected to nearly triple the value, exceeding 490 billion U.S. dollars.
There’s quite a great upward movement in cashless transactions. The world is expected to see tremendous growth and a quick shift towards non-cash transactions. But here we are!
What is a cashless society?
What are the various types of cashless payments?
What are the benefits of cashless transactions?
Is it safe to see the world moving towards the non-cash payment method?
Well, all these questions make sense, and the concept of a cashless society is genuine. A cashless society is basically where financial transactions take place in the digital form. Instead of physical banknotes or coins, we will see virtual cash in our bank accounts or digital wallets.
Cashless society exists in the form of banking cards (debit and credit cards), mobile wallets, point of sales (POS), mobile and internet banking, etc.
So let’s understand how these work in reality.
We have been using debit and credit cards for several years. They are the most popular and most used cashless payment methods. They came with many benefits such as secure payments, instant and easy, reward points, other discounts, etc.
These banking cards can be used to make cashless payments, online purchases on the spot, or store the card information on a mobile wallet to pursue digital payments. They can be used in PoS machines to make online transactions.
Banking cards are further produced in various forms, like MasterCard, Visa, Rupay, etc.
The USSD, short for Unstructured Supplementary Service Data, is one more cashless method. People with no smartphones or internet facilities can use the USSD payment method to conduct online transactions.
If the user dials *99# from his phone, they will be able to use an interactive voice menu on their mobile phone. This will help the users conduct online transactions. But the mobile number needs to be linked to the bank account.
This method uses the MMID and MPIN and users’ mobile number or account number with IFSC code to complete the transaction successfully.
Mobile wallet applications are pretty famous today. And since the pandemic, we have all gone through ‘online living.’ The mobile wallet applications are super fast and secure.
Users can custody, send, and receive money in their digital wallets to make payments. Once the user links their bank account to the wallet, it makes it easy to send and receive money to anyone at any time. However, we should also ensure that the name, phone number, email ID, or unique ID or scanning QR code are right.
The mobile wallets also allow users to make payments to merchants, book tickets, pay various utility bills, do recharges, etc., on one go!
Thus, this is swift in growth and simple to use.
QR codes are mostly used at merchant service stores. QR, aka Quick Response, is in the form of a black square pattern arranged on a square grid. The smartphone cameras can read these codes to complete the transaction.
All you have to do is scan the QR code and make the payment from your digital wallet.
With one simple tap, the contactless payment enables you to complete the transaction. So the tap could be with a card like debit, credit, or a smart card. You can wave or tap the card at a point of sale terminal and wind up the transaction. This is all based on the NFC (near field communication) or RFID technology.
Due to their instant and secure nature, the contactless payment method can be used at fuel stations, toll booths, parking garages, in-store shopping, etc.
Users can also link the NFC mode to the mobile wallet and complete the transaction using by keeping the phone near the reader.
Electronic clearance service (ECS) is widely used by government or corporation sectors to make bulk payments. Such as the monthly installments, paying off utility bills, disbursing pensions, salaries, etc. This payment method can be used for both debit and credit transactions.
The ECS payment method requires authorization from banks. This payment method can also have instructions on the maximum amount of debt, validity period, and purpose of the transaction.
Thus, these are the most popular cashless or digital payment methods currently being used across the world. These are undergoing significant changes every day, and so soon, we will all shift to a cashless society!