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The extinction of cash: Countries adopting cashless systems

The first recorded use of money in societies across the globe spans back as early as 5000 B.C where metal objects were used as a form of currency. The Lydians, an Iron Age kingdom located in what is now Western Turkey, would later on become the first civilization in western society to make use of coins in 700 B.C. From crafted coins developing into paper notes and electronic transfers, the world has seen drastic changes in monetary instruments over the years. In today's world, cash is a liquid asset which enables people to settle current obligations as it can be converted into pretty much anything in a short amount of time. This type of ability renders cash to be an effective method of payment or reimbursement for illicit and illegal activities. Upon other reasons such as theft, it is for that reason why many developed countries are pioneering a new age where cash won’t be used in transactions. One such country, outside of the ‘developed sphere’  looking to reduce the circulation of black money( money from illegal activities) in their economy is India’s central government by implementing a shock ban on currency notes of higher denominations.

This controversy-prone topic has lead economic buffs and pundits to question the potential benefits and shortfalls of implementing such systems. One argument against the implementation is the fact that people's money would essentially be under the control of governments and 3rd party providers who could expose the money to environmental conditions such as interest rates and hacking. Despite the divisive nature of the topic, the global trend shows that more countries are gradually fading out the use of the cash. So it begs the question, is cash on the brink of extinction?

Research conducted by Forex bonuses looked at the top economies of the world and based their cashless system on six metrics: the number of credit cards per person; the number of debit cards per person; the cards in issue that have contactless functionality; the growth of cashless payments over the past five years; payment transactions made using non-cash methods; and the number of people that are aware of what mobile payments options they have available to use.



Australia 

According to Investopedia, in 2016, Citibank in Australia got rid of cash at all its branches including the cash machines. Citibank said this move was motivated by a lack of consumer demand given that only 4% of its customers made cash transactions the whole year. Currently, Australians have an average of 1.75 cards per person.



South Korea

The Bank of Korea, South Korea’s central bank, has implemented initiatives that aim to make the country cashless by 2020. One plan is to have merchants top-up consumers T-Money cards, which are popular prepaid cards used in the city for public transport. Reimbursement occurs by retailers transferring change into these accounts rather than handing out cash. South Korea’s cash transactions account for only 20% of their total transactions.



Japan

With the Olympics approaching, Japan is making efforts to phase out cash in the private and public sectors. Plans in the financial industry are already underway with Mizuho, Mitsubishi UFJ Financial Group Inc. and Sumitomo Mitsui Financial Group Inc. agreeing to unify QR code specifications for cashless payments. In Japan, 26% of all cards issued have contactless functionality. The country also has an average of 3.3 debits per capita with 33% of consumers paying via non-cash methods. 



China

China became the fastest economy in history to become a powerhouse and as of late, China also experienced the highest growth in cashless payments over the past 5 years. The vast majority of people use two systems, AliPay and WeChat Pay and scan QR codes to pay for almost anything. Wechat, unlike other service providers in the west that require you to download a QR reader, makes use of an embedded QR code reader. WeChat has a user base of 963 million in China alone and is reportedly even accepted by beggars and street performers.



United Kingdom

Approximately 47% of people in the UK are aware of the alternative cashless payment methods available to them. Although 2.7 million people still rely solely on cash, the UK is ranked 3rd in the worlds most cashless countries. Currently, 41% of issued cards have contactless functionality and 52% of consumer payment transactions use non-cash methods.



Sweden

Being the first country in Europe to issue official banknotes(1661), Sweden is now the first to adopt a 99% cashless society. Largely due to its small population and tech-savvy environment, barely 1% of the value of all payments in Sweden were paid in coins or notes in 2016. Shops and businesses are legally allowed to refuse cash payments and 99% of adults have made digital payments.


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