Several countries are moving towards a cashless economy, with payments only through cards, ATMs and apps. What are the costs and effects on the economy
Pay for everything without cash. Make banknotes and coins disappear from circulation. It could happen and in a nearer future than we think. Several countries are moving towards a cashless economywith payments only through cards, debit cards and apps.
Studies, on the other hand, show that paying with cards and debit cards is cheaper: for both the consumer and the trader. And, furthermore, reducing the circulation of cash can also help a country’s economy. But is this really the current trend?
Some studies clearly say yes: the International Monetary Fund predicted, a few years ago, that cash would decrease by 1.4% a year. The Swedish central bank, on the other hand, predicts that as early as 2023 the country could be practically cashless. In Finland this transaction would happen in 2029 and something similar could also happen in Norway. The use of cash is also in sharp decline in Canada: it has decreased by 40% in the last five years.
Then there are the costs: a study by the Bank of Italy shows that paying with the POS costs less than cash. Compared with an average cost of 1% for electronic payments, the private cost of cash is instead higher for various reasons: from security charges (risk of theft, insurance) to the cost that falls on all citizens to print banknotes and carry out anti-counterfeiting checks.
But what are the effects of cashless on the economy? In this case, the case of South Korea comes to our aid, where tax incentives have been introduced for electronic payments. In 15 years the country has become almost cashless and the GDP has grown: against lost revenues of 1.5 billion a year, there has been higher revenues – with the emergence of the undeclared – of 2.6 billion. And counterfeit money has all but disappeared: Only 272 counterfeit banknotes were seized in 2020.