The global economy is rapidly evolving, and payments are no exception. An increasing number of people are embracing digital payments as they believe that the future of money is cashless.
From privately issued cryptocurrencies to Central Bank Digital Currencies, there is a growing range of options for those who want to move away from traditional fiat currencies.
Non-fungible tokens (NFTs) are also gaining popularity as they offer a new way to store value and carry out transactions. According to a BanklessTimes analysis, 65% of pro-digital payment users trust NFTs. This puts NFTs in second place in terms of their trust, behind only physical cash, which enjoys the confidence of 85% of users.
BanklessTimes’ CEO Jonathan Merry has been explaining the growing preference for NFTs as a payment medium.
Merry said, “NFTs offer several advantages over traditional forms of payment, including security, transparency, and immutability. With them, you can be confident that your payment will never be lost or stolen and will always be processed as you intended.”
Those features make NFTs an attractive option for both individuals and businesses alike. They also explain why 60% of respondents expect to buy, hold or sell NFTs in the next three years. As the technology supporting them improves, they are bound to go mainstream.
Towards a cashless society
More and more people are using digital payment methods, and fewer are using cash. This trend is reflected in BanklessTimes’ analysis indicating that 18% of supporters of digital payments believe their country will become cashless in the next year or two. That’s up from 17% in 2021 and 14% in 2020.
This trend will likely continue as cashless payments are more convenient and secure than cash. What’s more, as more businesses move online, there will be less need for money. So, it isn’t surprising that fewer people are saying their country will never become cashless. In 2020, one-third of respondents said this; in 2021, it was one-fifth; now, it’s just 13%.
Governments remain central to adoption
It’s regulations and other policies that will ultimately drive the shift away from physical cash. So it isn’t surprising that 49% of those who believe their countries will go cashless see the government as having the most significant influence in that push. That figure has risen significantly from 27% in 2021.
Which are the major impediments to cashless transactions?
While there are benefits to this move towards cashless payments, including convenience and security, there are also some challenges. 27% of those confident of the switch to digital payments cite the government as the main barrier to adoption. That’s an increase from 20% in 2021.
Bodies charged with the regulatory responsibility over digital assets may not be conversant with the technology. Consequently, they may find regulating digital assets appropriately, efficiently, and successfully challenging.
Low consumer and business acceptance
In addition, consumers and businesses have been slow to adopt cashless technologies, preferring the tried-and-true methods of cash and check. 25% cite low consumer acceptance, while 24% point to low business acceptance. However, these barriers will likely fall as more people become familiar with cashless options and see their benefits.
Again, 23% of them deem habits with physical cash as the second major impediment to that realization. That is a significant decrease from 40% who held a similar belief in 2021. Habits are difficult to change, and even if some people are willing to give up cash, many others will continue to cling to it out of habit.
Cashless transactions could be beneficial
While there are many challenges to implementing a cashless society, there are also many potential benefits. Cashless transactions are often faster and more efficient than cash transactions. Additionally, cashless societies can help reduce crime and increase transparency. With the right policies in place, cashless societies can be highly effective.