The evolution in payment systems has changed from trading with physical commodities like shells, gold and livestock; to fiat money like paper notes and credit cards that in itself, has no intrinsic value. Money has taken many forms – driven by the economic circumstances and technological developments of the day.
The current age is no different. Advances in computer sciences and information technology has had a huge impact on commerce and how money is defined and interacted with. Cash, as a means of payment, could be on the decline and has been for decades. In the digital age, a cashless future is the essential next step in economic evolution.
First-world countries like Canada, Norway, Sweden and Denmark are drastically tightening the noose on hard cash with intentions to abandon the paper currency altogether. New laws now prohibit large cash transactions and bank branches no longer accept or offer cash.
In Denmark, retailers are authorised by the government to refuse cash payments for petrol and groceries. Donations to the homeless can be made and received with new tech innovations making cash redundant, enabling all population groups to make the transition into a cashless society.
The rest of the world is following suit to capitalise on the opportunities and benefits of the digital age. Developing countries are littered with drivers of the imminent cashless evolution.
The power of inclusion
A cashless society is exactly what African banks, businesses and citizens need, given that roughly 326 million Africans don’t have access to formal financial services. Financial inclusion means access to potentially billions of dollars, currently residing in piggy banks and under mattresses.
Breakthrough FinTech innovations by digital and mobile banking partners are radically addressing the issue of financial exclusion on the African continent. According to the World Bank, 700 million people globally gained access to financial services between 2011 and 2014, reducing the world’s unbanked population by 20%. But there is still much work to be done.
Driven by the rapid penetration of mobile phones, mobile banking solutions like mobile bank accounts, mobile wallets and virtual cards are disrupting established models in the financial landscape, fast-tracking the digital transformation of banking.
Digital business as usual
E-commerce in Africa is growing by 26% every year, as is the demand for alternative online payment solutions. Banks, businesses and citizens are losing out on the benefits and potential profits of online shopping. The gatekeeper? Traditional credit cards. Despite rapid mobile and internet penetration, millions of Africans are unable to shop online simply because they don’t have a bank card that enables them to shop online. About half of those with credit cards fear online fraud and refrain from transacting online.
Superior security and profit potential
In a cashless world, money is nothing more than electronic ones and zeros transferred between computers in seconds. Without physical money to count, process, transport and store, banks can raise profit margins by cutting down on related security risks, costly ATM maintenance, delinquent loans and human error.
Cash is expensive for the consumers too. Cash can’t earn interest and can easily be stolen, not to mention time and travel costs to and from ATM and bank branches. Making payments is just as timely and costly. Digital payment solutions like mobile bank accounts and mobile wallets, cut the queues and put customers first in line, every time. It is a secure and convenient alternative to cash under the mattress and supports purchases, cash deposits and withdrawals, money transfers and prepaid vouchers.
The bright new age of banking
FinTech innovations that cater for the unique financial needs in Africa, can give banks an unparalleled competitive edge. It can improve the lives of billions of customers who are now able to transact more efficiently and plan for the future. A cashless society is imminent. It is necessary for human prosperity and economic transformation in Africa. Banks can be ahead of the curb with the right tech innovation and partner in their arsenal.
By Brian Richardson, CEO and founder of WIZZIT International