Our financial lives have been transformed by digital payments and the transition towards a cashless society in recent years. The adoption of cashless transactions has many benefits, including simplifying our financial lives and reducing our overall expenses.
It may be for this reason that more and more people are switching to cashless payment systems.
In less than a decade, Americans went cashless by double digits in a typical week, according to the Pew Research Center. Approximately four out of ten Americans (41%) say they rarely use cash for purchases in a typical week, up from 29% in 2018 and 24% in 2015.
On the other hand, the proportion of Americans paying for all or almost all of their purchases using cash has steadily declined from 24% in 2015 to 18% in 2018 to 14% in 2019. However, roughly six-in-ten Americans (59%) say they pay for some of their purchases in cash in a typical week.
If you still think cash is king, here are 26 ways a cashless society can help you save money and transform your financial habits.
1. Lower transaction costs.
When it comes to digital payments, they’re usually cheaper than cash payments.
With every purchase, you save immediately.
2. Earn cashback rewards.
Businesses often give you cashback or discounts if you use cashless payments. Over time, you’ll save a lot of money. If you use your credit card to pay cashless, you’ll get airline miles and cashback.
You might get more rewards with some credit cards than others depending on your spending habits. There’s a catch, though: If you don’t spend enough on travel rewards, you won’t get the bonus miles. Due to this, you might not get enough to justify buying it or paying for it.
However, since cashback comes with a wide range of reward categories and can be used anywhere, it’s an all-around bonus you may find appealing.
You can also earn different rewards with different credit cards. There are many cards that give you a flat cashback percentage for all purchases, while others give you a higher percentage for certain categories, like dining or shopping at certain stores.
3. You can track your spending easier.
The problem with cash is keeping track of how much you spend. With a card or digital payment, your transactions are tracked in real time.
Simply put, it makes it easy to see where your money is going and cut back where necessary.
4. Budgeting apps integration.
By integrating cashless systems with budgeting apps, it is easier to track expenses and identify areas for saving.
YNAB, for example, allows you to sync your bank account data, import data from a file or manually enter transactions. Once you have signed up, you can create your first budget and assign every dollar a purpose, such as rent or car payment, according to your needs.
In time, you will be spending less money than you earned 30 days ago. In this way, you’ll always be one month ahead.
5. Eliminate ATM fees.
An out-of-network ATM fee assessed by one’s bank plus a surcharge imposed by the ATM owner combined to a total of $4.66 in Bankrate findings, the highest since 2019. Non-customers were charged a surcharge of $3.14, up 1.9 percent from $3.08 in 2021.
By reducing ATM withdrawals, or eliminating them altogether, you can eliminate ATM fees.
6. Reduce currency exchange costs.
When you make a purchase abroad or in a currency other than the U.S. dollar (USD), the foreign transaction fee (FX) appears on your credit card bill. The fee, which typically ranges from 1% to 3%, is charged by many credit card issuers.
However, cashless payments can save you from costly currency exchange fees and unfavorable exchange rates when traveling internationally.
7. Pay your bills automatically.
Using automatic payments to pay your bills can save you money in a number of ways.
- You may be eligible for discounts. Incentives or discounts may be offered to customers who set up automatic payments. Signing up for automatic bill payment might give you a small discount from your utility company, for instance.
- You can avoid late fees. The cost of late fees can add up quickly. With automatic payments, you will never be late on a payment because you forgot to make it.
- You’ll stop paying overdraft fees. When your checking account’s balance falls below zero, you may be charged a fee. In order to avoid this, you need to make sure you have enough money in your account to pay your bills automatically.
- Your credit score may improve. Making on-time payments on your bills is an important factor in determining your credit score. Setting up automatic payments increases your likelihood of paying your bills on time, which helps you improve your credit score.
- You’ll save time. You can save a lot of time by setting up automatic payments. No more checking the mail or making monthly payments online.
Additionally, automatic bill payments can assist you in staying organized and keeping track of your spending. If you set up autopay for all your bills, you can easily track your spending. As a result, you will be able to budget more effectively and achieve your financial goals more easily.
8. Paperless transactions.
By using electronic receipts and statements, you can lead a greener lifestyle. Additionally, since companies save on paper, stamps, and sorting when customers pay online, it can be beneficial for their bottom line to have as many customers as possible on paperless billing.
It is common for companies to offer customers some sort of incentive to switch to paperless services.
9. It’s no longer necessary to carry loose change.
As a result of a cashless society, loose change no longer needs to be carried. That might not seem like a big deal. A lot of loose change, however, can accumulate over time and add unnecessary clutter to your life.
Moreover, loose change has no value over time. Your spare change from everyday purchases can instead be invested using an app such as Acorns. Let’s say you spend $30.45 on groceries. You will automatically receive $0.55 from Acorns for your future.
10. Safeguards your cash.
A shopping experience, whether it’s online or offline, is not without risk. With that said, there is nothing worse than losing a wallet, having a credit card account hacked, or even fraudulently using a check
At the same time, whenever you carry cash, you will be unable to track where the money went or who spent it. It is therefore risky to carry money around due to theft. It is possible, however, to track, dispute, freeze, or even prevent fraudulent transactions using cashless payment methods.
Additionally, most debit and credit cards now have EMV chip technology to prevent fraud. Also, all online transactions are encrypted, and your unique password is required in order to access them.
Geolocation data, transaction history, and other factors can also be used by credit card providers to detect suspicious transactions. Your card provider can reject payment if someone outside your area steals your card and tries to make a large purchase. Overall, this is much safer and easier than trying to track down your cash thief.
11. Cash is dirty.
If you haven’t gotten the memo, cash is filthy. In fact, there are reports that paper money carries more germs than household toilets. Moreover, bills are a breeding ground for gross microbes: germs can live for 48 hours on most surfaces, but reportedly the flu virus can survive on paper money for 17 days or more.
In addition to being an inconvenience, being sick can cost you money in the following ways:
- Lost wages. When you’re sick, unpaid leave may be your only option if you don’t have paid sick days. When you’re unable to work for a long period of time, this can result in significant income loss.
- Increased medical expenses. It is possible to walk into a doctor’s office and have to pay out of pocket for prescriptions, doctor’s visits, and other medical expenses — even if you have health insurance. When you’re sick for a long time, these costs can add up quickly.
- Reduced productivity. It is difficult to work as efficiently when you are sick. As a result, your employer may have to pay for missed deadlines, errors, and other problems. Further, this may prevent you from engaging in your side hustle.
- Increased stress. There are many health problems that can increase stress, including being sick. Consequently, medical expenses and wages may be lost even further.
12. Convenient tap-and-go.
Payments made with contactless cards are quick and convenient, saving you time when you’re busy. While it might seem insignificant, these extra minutes add up enough for you to revise your budget or engage in money-making activities.
13. You can benefit from discounts.
Businesses that accept cashless payments may offer discounts. As an example, when you pay with your Starbucks card or app, you’ll get free refills of hot or cold brewed coffee. You can also receive notifications about new offers and deals by downloading the Dunkin Donuts app.
14. The ability to access digital coupons.
It is possible to save significant amounts of money on groceries and other essentials by using digital coupons available on a variety of digital payment platforms.
15. Grace period without interest.
In some cases, credit cards offer a grace period that is interest-free. As a result, you won’t have to pay immediate interest on the money you borrow. In general, they last between 21 and 55 days.
16. Easily split bills.
Maintaining a running tab on your friends and family can be appealing. However, taking on a personal loan with your peers may not be a smart move based on the risk of getting into debt with them.
Splitting bills can be done quickly using a cashless application like Venmo. You can pay exactly what you owe using payment apps since they connect directly to your bank account and credit cards.
17. Early sales access.
With some retailers, customers paying with credit cards are given early access to sales. Nordstrom credit card holders, for instance, provide early access to the retailer’s anniversary sale, which takes place every summer and includes apparel, shoes, accessories, and home goods.
18. Warranty extensions are available.
Purchases made with credit cards may be covered by extended warranties. A case in point is the Chase Sapphire Preferred Card. A manufacturer’s warranty of three years or less is extended by one year; $10,000 per item, $50,000 per account.
19. Rental car insurance is available.
If you use your credit card to pay for a rental car, some cards offer insurance. The Capital One Venture X Rewards Credit Card is one example. Your rental car may be covered by an auto rental collision damage waiver that covers theft and collision damages up to $75,000, up to the actual cash value of the vehicle.
20. Protect yourself from rising prices.
It is possible to get price protection with some credit cards. Basically, you’re covered if the price of your purchase drops within a set period of time.
21. Boost your digital wallet’s capacity.
Groceries, gifts, and everyday essentials can be easily ordered online. Besides skipping the store line, you’ll get some sweet discounts too.
The process of setting up a payment method with your favorite online shop can be just as straightforward. However, juggling multiple cards between multiple sites or digging into your wallet every time you want to make a payment slows down the speed and convenience of digital retail.
Digital wallets, a suite of payment services and information the user keeps on their device, are making checkout easier at many retailers. At checkout, simply login to your digital wallet, and your payment options are displayed.
It’s possible to use digital wallets to combine credit cards, debit cards, peer-to-peer payment apps, and even cryptocurrencies. Payment is as easy as one click from site to site with your digital wallet.
Digital wallets can also be taken offline. With a tap of your phone, you can pay at many physical stores with your digital wallet.
22. Financial goals tracking.
Financial goals can be tracked easily and quickly using digital payment apps. The result is better financial discipline and money management.
23. Counterfeit money risk reduced.
In a cashless society, counterfeit money is virtually eliminated, protecting your finances.
This might not seem like a priority. But, it was estimated that the counterfeit money detection market would reach US$2.8 billion in 2022. The market is also expected to reach US$4.1 Billion by 2030, growing at a CAGR of 4.8%.
24. Access to financial services.
Cashless economies encourage financial technology development. Why’s that relevant? Financial services benefit individuals and businesses alike. Here are a few advantages:
- Increased financial security. People can save money, manage their debt, and protect their assets. As a result, they can better weather financial shocks.
- Improved access to credit. When people need credit, financial services can help them start or grow a business, invest in their education, make major purchases, or save for retirement.
- Enhanced economic opportunities. People can use financial services to start a business, save for retirement, and invest in their education. Upward mobility and increased income can result.
- Reduced poverty. Having access to financial services helps people build assets and escape poverty.
- Increased financial inclusion. Having access to, affordability, and knowledge of financial services can reduce financial exclusion.
In general, having access to financial services can improve people’s lives and businesses.
25. Reduce impulse buying.
Due to the physical nature of cash, you’re more likely to be conscious of how much you spend. When you swipe a credit or debit card, it’s easy to overspend.
Digital payments, however, give you time to reconsider impulse purchases. After all, contactless transactions take only one or two seconds compared with cash, which takes six to seven.
26. Simplify, organize, and declutter.
Digital transactions help you declutter your wallet by eliminating physical cash. In addition, it promotes better financial management.
Conclusion
In a cashless society, embracing digital payment methods can simplify your finances and save you significant amounts of money. Going cashless offers countless benefits, from lower transaction costs to cashback rewards to greater security.
FAQs
How does a cashless society work?
In a cashless society, all financial transactions are carried out electronically, without the use of physical cash. Online and mobile payment services, credit cards and debit cards, electronic money transfers, or cryptocurrency are all ways people and businesses transfer money digitally.
What are the benefits of a cashless society?
A cashless society has several potential benefits. Among them:
- Increased efficiency. Compared to cash transactions, cashless transactions are faster. Because you don’t have to count or handle cash, and there’s less fraud risk.
- Reduced crime. A cashless society can help reduce crime, like thefts and muggings. Because there’s no cash to steal, and criminals won’t target businesses that don’t take cash.
- Improved tax collection. Governments can collect taxes easier in cashless societies. The reason for this is that all transactions are recorded electronically, so figuring out income and expenses is easier.
- Increased financial inclusion. Financial inclusion can be increased by cashless societies. You can still use electronic payment methods if you don’t have a bank account or a credit card.
What are the drawbacks of a cashless society?
A cashless society also has some drawbacks. Some of them are:
- Increased privacy concerns. There’s a digital trail left behind by cashless transactions, which might make people worry about their privacy. The reason is that governments and businesses could track people’s spending habits.
- Risk of fraud. It’s possible for hackers to steal people’s personal info and use it fraudulently.
- Increasing reliance on technology. A cashless society requires people to have access to technology to pay. Without a computer or smartphone, this could be a problem.
Are there any challenges to going cashless?
Moving to a cashless society has a lot of challenges, including:
- Electronic payments need to be adopted widely.
- Everyone should have access to electronic payments.
- People’s privacy needs to be protected in a cashless society.
- In a cashless society, fraud needs to be prevented.
Is a cashless society inevitable?
There’s no way to tell if a cashless society is inevitable. Before a cashless society can be fully implemented, a number of challenges need to be addressed. It’s possible, however, that we’ll eventually move to a cashless society due to the trend toward digital payments.
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