Early humans used bartering in lieu of money to buy goods, be it cattle or sheep, vegetables and grain. But today, one might be hard-pressed to use physical currency at all. Economists estimate that only eight per cent of the world’s money exists in the form of tangible coins and notes. The rest is floating in the digital ether.
The European Central Bank also ended production and issuance of €500 banknotes a year prior.
We are witnessing a transition away from physical currency in favour of cashless solutions such as contactless cards and mobile payments. The benefits are certainly palpable: improved security for consumers; less physical cash to handle and fewer security measures for commerce and banks; superior tax transparency for governments.
The direction of travel is certainly the right one. But we risk sleepwalking into this cashless world at detriment to the world’s two billion unbanked adults — those without access to the services of a bank or similar financial organisation. And furthermore, are we really developing economies to drive the value of cashless transactions via smaller businesses that stand to benefit the most from not having to deal with cash?
As with most problems, necessity is the mother of invention, and technological strides are being taken to improve the lives of the unbanked. A great example of this is a new social innovation project called Greater Change, which enables donations by scanning a QR code, like the kind issued for online tickets. Passersby without change who wish to give money can scan the code using a smartphone and make an online payment to the person. It’s simple innovation like this that will ensure that, when the time comes, and cash is redundant, unbanked individuals will have access to useful and affordable financial products and services that meet their needs.