It’s Time to Get Contactless Transactions in Your Business Strategy

It’s Time to Get Contactless Transactions in Your Business Strategy

Cash has been king for the longest time now, the means of payments that people are used to. Paper currency transactions is the norm in most countries. However, the “cashless revolution” has been going in a number of countries since 2016 and has started to become a new norm. Data from 2016 shows that the adoption of a cashless society has been steadily rising since the said year. 

Cash is King

Holland has been largely cashless since 2016 and is, perhaps, the most cashless country in the whole of Europe. In 2016, the country had set a goal to have 60% of retail payments in the country be done using cashless means by 2018 and data from the Dutch show that, prior to this goal, 50% of their 60% target had been actually reached in as early as 2015. The driver for going cashless in this country, famous around the world for their tulips, are the coming from the Dutch consumers themselves. In a lot of places in Holland, cash is somehow disappearing as the legal tender to do payments. A lot of the retailers and shop owners in Holland prefer cashless as it is “cleaner” and “safer”.  Even homeless people in that country of 17.8 million people only accept digital as payment for any service they render or for any product that they are selling. A few even view paper currencies as a dinosaur. 

It’s not only Holland in the EU that is going fully cashless. Sweden has also begun to move to going cashless. The Swedes are pushing hard to become the leading cashless society in the world and is even pushing harder to be a totally cashless economy by 2023 – and they are close to doing it Many Swedes no longer carry cash, and, in fact, one will be hard-pressed to find a shop in Sweden today that accepts paper currency as payment. As of September 2019, cash represented only 1% of Sweden’s GDP and data from the same year shows that cash transactions shall be in the decline 10% in the succeeding years. Data shows that less than 13% of the people in Sweden now rely on cash. Businesses, including banks, cited that it is more expensive to handle cash, so they want to lower or to practically eliminate operational expenses related to handling and moving cash. The people say that it’s more secure to do digital payments as well, because not carrying cash decreased the incidents of robberies and counterfeiting, among other concerns related to security. 

Cashless isn’t limited to European nations. South Africa has been silently building up its capacities to build a cashless economy in their near future. A Twitter poll launched early last year indicated that 35% of South Africans want to transact in a purely digital form. This poll was conducted by Capitec that aims to draw the attention of South Africans on what it really costs to do cash transactions. While cash is still king in South Africa, evidence found by experts in the nation showed that it is not the best way to manage money.”  

Then there is China. 

Numerous articles abound on the Internet wherein Chinese citizens said that they can hardly remember when they used paper currency last to pay for an item. Since 2017, half of the world’s contactless transactions is happening in China. While the transformation five years ago was fueled by millennials, the surge of China to go totally cashless in the coming months will be fueled by a disease named COVID-19.

Its Time to Get Contactless Transactions in Your Business Strategy

There was an article that heavily circulated in the Internet a week ago that said that the COVID-19 virus shows up on paper money and can live on the largely cloth-based construction of the paper money for days. Every Yuan that circulated in China at the start of the COVID-19 crisis became “conduits for infection”. According to a leading international columnist who is Chinese by descent, as a result of the onslaught of COVID-19 in that country, China would emerge largely as a cashless society right after this pandemic subsides, meaning all transactions will be done digitallyThe cashless revolution that will happen in China did not come overnight. Contactless payments spread across the nation with breathtaking speed, scale and efficiency five years ago. Over the last five years, contactless transactions changed the lives of every single citizen in China and, with what happened over the last four to five months, the change will be fueled up to a new scale wherein paper money will practically have very little use. 

The current COVID-19 crisis provides a window and opportunity for BSFIs, businesses and their customers to go contactless, do away of paper currency. The payment systems that we not have in place is not ready for the pandemic that is hitting us at the moment and, due to the effects of COVID-19 to the global economy, maintaining the current, “traditional infrastructure” to support the current payment systems will become more expensive.   

Its Time To Get Contactless Transactions in Your Business

The growth of Open Banking and the lighting-quick spread of mobile technologies offered by fintech providers have opened even a wider door and is offering a better argument on why contactless transactions should be the norm currently. There lots of data that can be found through the Internet that says that the maturity of digital infrastructure payments worldwide is slowing the use of cash and, in some cases, moving towards eliminating it. In the UK alone, less than 35% of all payments are done using paper currency. The Banko Sentral ng Pilipinas’ program for having 20% of all transactions done via digital means this year has been a success.   

Security and speed aren’t the only benefits of going cashless, but they are the primary driving forces. Articles abound in Internet wherein these articles expound on the other benefits of having less reliance in paper currency like convenience, less fees to pay for (related to moving cash and to doing cash transactions), budgetary discipline and keeping track of spending – and the movement of money – are the other valid and real reasons to go cashless.  

Banking and financial experts have warned that rising bank charges and the disappearance of the need to have brick-and-mortar branches will further drive businesses to do away with cash. One can also argue that going cashless can improve the monetary policy of nations. When economic downturns hit a nation, the natural reaction of people shall be to withdraw cash and keep them, thus negatively influencing the national economy because money is not moving. By going cashless, governments can have greater control over the economy because they can have a better monetary policy which, in turn, can stimulate the banks to lend more and can stimulate people to spend more and invest more, instead of keeping their money in their homes. 

The question now lies if the financial institutions area ready, if their businesses are ready. Do they have the necessary infrastructure to go fully digital? Do they have the necessary structure and software to mitigate or eliminate the risk of fraud, identify theft and data breaches pro-actively? The only way banks and financial institutions to be ready is for them to start designing/adapting and rolling out a “digital only banking” strategy. Should all banks do this? If they want to stay relevant in the coming (actually, now here) digital economy of the future, the answer should be a resounding yes. 

Are you ready for a cashless society

One of Geniusto’s core specialty is to help BSFIs develop their own digital-only strategy. The breadth of our experience and the technology we provide to help BSFIs go contactless span several years and is being utilized by leading banks in several countries world-wide. We can put up your banks core digital platform no longer than six months. To get your company reading for its digital future, we can conduct a digital transformation (DX)program for your company wherein we demystify and break down (into sizeable chunks) DX to make it more realistic to the needs of your bank as it prepares to go digital. Our engineers and architects eat and breathe digital banking and they can provide real-time consultancy to your bank as part of your digital banking project with us. 

The road to going fully digital isn’t going to be easy. It’s like preparing for a marathon and, like any good marathon runner, you need a coach that will give you the right strategy, the right equipment and the right mindset that your bank needs to go fully digital – and that is Geniusto. Unlike a marathon, however, we can help you deploy your digital baking platform in a matter of a couple of sprints. No long waits! It means that you and your customers can benefit from what cashless transactions bring. 

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