The modern financial ecosystem is digital. Where once cash was king, now we can utilize the blockchain, pay for our groceries in crypto, invest in NFTs, and transact in any digital asset of our choice, anywhere in the world. The economic landscape is irreversibly linked to digital innovations, with new technology and opportunities constantly being created. This has brought about the concept of ‘cashless societies’ that are quickly becoming a reality.
A cashless society is one in which the majority - if not all - transactions are done digitally and bills or coins do not change hands. That definition is up for debate, especially whether we should count ‘most’ transactions or ‘all’. Whichever definition, there is no society that is completely cashless. However, some are getting closer year by year. This article breaks down which one might be first.
Cashless Europe?
How close is Europe to becoming cashless? It’s a continent with a wide scale. On the one end, you have Nordic countries such as Finland and Sweden, where cash is becoming obsolete. In Sweden, only 1% of transactions are done through cash. As this Nordic finance correspondent put it: ‘A combination of good high-speed internet coverage, high digital literacy rates, large rural populations and fast-growing fintech industries had put the Nordic neighbours on a fast track to a future without cash.’
This is very different from other parts of Europe, where cash is still the predominant form of payment. In a recent survey by technology consultancy BearingPoint, the German-speaking countries were cited as not only the biggest cash users but also the least likely to make the switch in the future: ‘In Germany (71%) and Austria (79%), cash use is significantly higher than in other European countries…78% of those surveyed in Austria do not see a turning away from cash use within the next 5 years.’
These countries demonstrate an interesting lack of correlation between cash use and digital usage. In Austria for instance, 95.7% of the country use the internet, making them one of the top 10 users in Europe. The same can be seen in Spain, which ranks one place higher in internet usage than Austria, but where cash is also the dominant form of payment.
Cashless Asia?
Japan is working on its ‘Cashless Vision’ promise, created by the Ministry of Economy, Trade and Industry in 2018. In China, 70% of consumers use WeChat Pay. Across the APAC region more generally, electronic direct payments are set to overtake cash transactions by 2028.
But Asia is another region with a marked contrast between cashless and digital payments. On the surface, it would seem that since Asia is one of the biggest innovators in digital payments the continent would be on its way to boasting cashless societies. Plus, there is a significant discrepancy seen in rural versus urban areas.
In 2024 the World Economic Forum found that 70% of Southeast Asia’s consumers are unbanked or underserved financially, depending predominantly on cash. These populations are dependent on physical banking entities, that use cash, to bring them any access to financial institutions. About half of the transactions in Thailand and Vietnam are settled in cash. So even with Japan’s promise to move to cashless, they have started relatively late considering their use of technology, and their regulatory frameworks are having to play catch up with technological advances.
Cashless Africa?
In Africa, the pandemic and huge investment from countries such as China have accelerated the disappearance of cash in the region. Mobile money has always been hugely popular throughout Africa, particularly in Sub-Saharan Africa, where around 145 mobile money providers are used regularly and are constantly advancing the digital payments industry. With strong telecommunication now penetrating even the most rural areas, digital money, and digital assets are thriving. Although many governments in Africa remain cool on the adoption of crypto at any official level, that has not stopped citizens from moving from traditional mobile payments to digital assets.
In Kenya, 94% of the population uses mobile money. Senegal has seen one of the biggest, and fastest, shifts to digital payments: between 2021 and 2022, nearly 40% of the population moved to digital money away from cash. This has been helped by the market leader, Wave, which processes billions of dollars of payments with its bank partners in Senegal.
Like Asia, Africa sees a stark difference between rural and urban populations when it comes to using cash. But unlike Asia, Africa has seen a much deeper and widespread penetration of mobile money into rural areas. Remittances from urban to rural areas are the leading reason for the use of mobile money and have even helped boost populations in these areas.
Cashless Americas?
The United States of America and Canada are on an unstoppable shift towards becoming cashless societies. Americans and Canadians use cash less often year by year, with the pandemic a leading cause for the drop in cash exchanging hands. Their neighbors to the south are some distance away from being at the same level - but are catching up fast.
In Latin America, debit cards have replaced cash as the preferred payment method. While travelers are still encouraged to not rely on being able to make a card payment, many countries in the region are beginning to onboard mobile payments, credit cards, and digital assets into their financial landscape. As a recent McKinsey study put it ‘Cash is losing ground, but it will remain relevant in the medium term, especially for people with lower incomes’. Their 2023 survey demonstrated this with 70% of respondents in Latin America having used cash in the past 30 days, despite only 30% saying it is their preferred payment method. A desire for less cash dependence is strong, but the technology is some way behind for the region to become even near ‘cashless’.
Cashless challenges and opportunities
Going fully cashless has come with some downsides that unaware nations are beginning to learn. In Nordic countries, for instance, the proximity to and frosty relationship with Russia has caused them to be more vulnerable to cyber-attacks. These attacks have targeted payment systems and card terminals as well as national banks. Sweden has gone so far as to tell its citizens that it “recommends everyone keep some cash on hand due to the vulnerabilities of digital payment solutions to cyber-attacks”. Cash in the Nordics is now seen as a backup for emergency situations based on global politics, not as a main form of payment.
Countries that simply decide to become cashless, without understanding the consequences, will suffer during the transition and with the ensuing difficulties. Countries that learn to integrate digital assets safely, securely, and in a way that benefits their populations' needs and wants, will make the transition more painlessly.
.png)
.png)
.png)
