When thinking of many, many people still imagine either a paper banknote with an easily recognizable historical figure on it or a metal coin. That is what money has been for thousands of years now and for the first time in its history, the way we pay is soon to be completely changed.
Physical money often referred to as cash, once was an innovation of its own. In general, there was no payment structure or a method up to some point in history. People used to trade products for services and the other way around. This worked fairly well for a while but as the civilization emerged, growing needs and demands resulted in the creation of the universal currency. They used to be made from gold or silver, underlining their immense value. Later, precious metals were changed with regular ones finally leading money’s development to paper banknotes. They went through a number of changes as well. Most importantly, more and more advanced security systems were implemented into banknotes to prevent counterfeit and other criminal activities. However, other than advancements, money as a concept has not seen a major change.
The real game-changer was the introduction of debit and credit cards in the second half of the 20th century. The first credit card was introduced in 1950, followed by a debit card in 1966. However, these innovative ways to perform financial transactions and use money did not find instant success. The hype around them arose in the 1990s when cashless services became popular for the first time. The trend was particularly visible in Europe and the United States. Soon, commercial banks started introducing more cashless services and a whole variety of debit as well as credit cards.
The launch of the first cards was undoubtedly a crucial event in banking history. However, this was not going to be the last one. The 1990s, the era of credit cards, brought an immense technological development. This was partly the reason why cashless payments started to emerge in that period of the 20th century. More companies had access to the infrastructure needed to accept cards and the number of such facilities boomed in just a blink of an eye.
Today, the developed world is dominated by digital technologies and the financial sector is quickly adapting to the present day. The 21st century saw a rise of global markets online, where users can trade with currencies. Those listed on quite a lot of sites gain profit by buying and selling different currencies. The year 2009 also witnessed the birth of bitcoin – a virtual currency. Today, they are also being actively traded on forex trading websites, representing an important sector of the industry.
Cash is dying: what methods of payment are replacing it in the 21st century?
Physical money is certainly falling. Once the most reliable source of payment has been proven to be not as convenient and safe as we thought it was. But the lack of trust in cash is not only occurring now because of its disadvantages. The new millennium brought even a more diverse palette of payment methods to us.
Technology is what really drives the world today. A soaring number of people have access to the worldwide web and needed gadgets to use it. Social mobility is increasing along with the overall global spending. The Generation Z-ers are expected to be the biggest spenders the world has ever seen, with the estimated purchasing power of roughly $143 billion in the United States alone. They also have more demands for companies and service providers. Young people demand smooth, smart, and most importantly digitized services. In response, the financial industry is trying to deliver on the modern demand.
The development of fintech began the exact same time the first credit card saw the sunlight in 1950. No, fintech was not a term back then, but the fact is that this smart industry has gradually developed to what it is today. It is a combination of 2 terms – financial and technology. It now already covers a broad area of financial services such as banking, money lending as well as insurance and aims to compete with the traditional service providers.
Now almost every bank in the developed world offers mobile or online banking services. Without them, establishing or maintaining a customer base is impossible. Money transfers happen within seconds both locally and internationally. They have many benefits, including being more convenient, faster, and cheaper. Moreover, the safety rate is also higher with them. The chances of crime are much higher when using physical money as cash is easy to counterfeit. Moreover, the presence of cash increases the risks of theft in the case of companies with physical branches.
Fintech is revolutionizing the world. Many thought that it would only find good use in developed nations as digitized services require constant access to the internet. However, the examples of India and Kenya have changed the existing perception. In underdeveloped countries, where there is a lack of physical financial services, for instance, commercial bank offices, fintech proved itself highly beneficial. By investing in the needed infrastructure, poorer nations can increase the general population’s access to financial services, which is crucial for economic development.
Some nations are already making a major move towards their cashless future. In 2018, for the first time in history, card payments took over cash in the United Kingdom. Now only 34% of all payments are made with cash in Britain. However, frontrunners on the pathway towards going completely cashless are Northern European countries. For example, only 2% of all payments are made using cash in Sweden.
The cashless future is quite close and it is a better future for all. It would mean delivering better, smarter, and faster financial services for customers worldwide while keeping transactions safer than ever before. Erasing cash from shops and other businesses could potentially decrease crime while fraud due to the weak security of physical money would almost disappear. Further development of fintech and its wider adoption will also result in increased access to services in all corners of the world, boosting the global economy. However, saying no to cash is still difficult for many. Roughly 5% of Britons still rely solely on cash. Moreover, going cashless in the nearest future is more realistic in developed nations. This process still requires nationwide advanced infrastructure to support the transaction. Rejecting cash in the nearest future might leave many without any means to pay or use financial services. However, it is certain that the future, foreseeable or not is cashless and fintech is what will be behind it.
