The Trajectory to a Cashless Society
The concept of an entirely cashless society has acquired a lot of momentum as the world becomes more digitally integrated. In order to improve efficiency, security, and economic transparency, nations are using cutting-edge technologies to lessen their reliance on physical currency.
Focal of Change: Sweden and China
One of the most developed nations in the transition to a cashless economy is Sweden. By establishing an environment that promotes digital payments and reduces the usage of cash, the Swedish government has actively assisted in this shift. Signs that read “No Cash Accepted” are now frequently seen in a variety of Swedish stores. According to a recent European Payments Council survey, cash is used in just 1% of transactions in Sweden. The law in Sweden supports the country’s transition to a cashless society, allowing businesses to “lawfully reject” cash payments. Furthermore, just 32 ATMs are found per 100,000 people in Sweden, which is low compared to other countries, and the majority of banks do not process cash transactions in-branch.
The nation has a very sophisticated payment system, and mobile payment apps like ‘Swish’, which let users send money immediately, are widely used. Sweden is a strong contender to go completely cashless in the upcoming years because of its high internet penetration, technologically literate populace, and innovative administration. China is another prominent nation that has seen a sharp increase in cashless transactions, especially through mobile platforms like WeChat Pay and Alipay. In less than 20 years, China went from being a cash-first culture to one with an 86% mobile payments adoption rate, making its cashless evolution an incredible tale.
The plan of Action
Some aspects of the tactics used by these nations are similar. The creation of safe and effective digital payment methods that are user-friendly, generally accepted, and capable of managing high transaction volumes is a crucial component. Government regulations are also very important. The central bank of Sweden has been investigating the possibility of issuing e-Krona, a digital money that would be used in conjunction with current payment methods. Similarly, a favorable regulatory environment for the expansion of cashless payment systems has been established by the Chinese government’s backing for e-CNY/Digital Yuan, China’s equivalent of a central bank digital currency. Additionally, a key component of moving towards a cashless society is financial inclusion. Governments must guarantee that digital payment systems are available to rural and marginalized people alike.This has been made possible in Sweden by the extensive use of
smartphones and the internet.
India’s Role: An Enlarging Process
Although there are still obstacles to overcome, India’s transition to a cashless society has advanced significantly in recent years. Following demonetisation in 2016, the government escalated its push for digital payments with programs like “Digital India” and the launch of the “Pradhan Mantri Jan Dhan Yojana,” which sought to provide banking to the unbanked. By offering a straightforward, affordable, and secure platform for money transfers, the Unified Payments Interface (UPI) has further transformed digital payments. Notwithstanding these developments, India still has particular difficulties making the full shift to a cashless economy. A sizable section of the Indian populace is still unbanked or underbanked, especially in rural areas where internet speeds are still inconsistent. Full adoption is still
hampered by the disparity in digital literacy. To increase public confidence in cashless systems, issues with privacy and security in digital transactions must also be resolved.
Conclusion
The transition to a cashless economy is a gradual and time-consuming process that cannot be completed in a few days or months. The administration must educate the public and have them ready to adjust to this transition. This includes implementing awareness campaigns to educate individuals, particularly those in low-income groups who rely entirely on cash, about the benefits of cashless and banking transactions. Even literate people are reluctant to conduct financial
transactions online due to fear, which is why financial literacy is essential for drawing more and more people to digital platforms.While China and Sweden are setting the standard for completely cashless societies, India has made considerable strides but still faces several obstacles.
Author: Ms. Anadhi Sharma, Bachelor in Political Science, Hindu College, University of Delhi
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