Is this the end of cash?

In the Covid-19 Era, businesses must change to adapt in many ways and one of them is transitioning from cash to cashless payments. For the first time in history, debit card usage has surpassed cash as the preferred payment method. The majority of customers now refuse to use cash out of concern over its ability to transmit infection. In other words, Covid has accelerated the move towards a cashless future. 

The decline of cash

Enabled by the pandemic, we were almost forced into a digital environment overnight, from working and studying from home to shopping using digital payment apps or online banking apps.

In fact, cash had already been on the verge of extinction for years. In Australia, just a decade ago, cash was used in 62% of transactions. That number fell to 27% in 2019 and is estimated to be less than 10% since the pandemic hit. More than 2,100 ATMs have disappeared from sight in Australia as a result. The need for coins also fell by more than half between 2013 and 2019. According to the Australian FinTech, cash is predicted to make up only 2% of all payments within the next 5 years. 

Take the Netherlands as an example where a bundle of cash doesn’t get you far at all. You’ll have the biggest headache paying for parking or even buying bagels. In Sweden, 7 of the largest banks joined hands to set up a popular instant payment app called Swish now with more than half of Swedish consumers. 

Leaving a trail of digital breadcrumbs

While consumers are mostly happy with this clean and “safe” situation, going cashless might actually be more problematic for small businesses than beneficial. 

Despite the convenience of digital payments, there’s still reluctance amongst the small businesses to go cashless since they have to shoulder the merchant fees that might cut more away from profits than they might like. In addition, it’ll become increasingly expensive to deposit cash into the bank. Some banks charge per transaction fees making it not viable for small businesses like cafes. Banks are therefore incentivising cashless transactions by charging more for over-the-counter transaction fees. It’s a big problem for small businesses like cafes and restaurants (already running on small margins and experiencing a sharp decline in customers during COVID). 

For small businesses that were predominantly cash-based, it will be impossible to hide their cashola from the tax man. Cash allows you to receive money anonymously. When you remove cash from the economy, every single transaction can be monitored, examined or audited. All payments that happen electronically will leave trackable records behind which come as evidence for the Tax Office to apply the pertinent legal tax obligation .

What does it mean for the Business Owners? 

The top concern is the lack of anonymity of electronic cash. Your financial history (aka. what you earn and what you do with your money) can easily be tracked. Picture, if you will, you’ve got a small cafe. Pre-covid, your customers come in to buy coffees using coins and you could save these extra coins for rainy days. Now more customers are paying for their coffee using ca

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