Where there is a barrier, though, you’ll find leaders working to knock it down.
As part of the event, Visa held a panel discussion with several leaders in the cashless field, including Pramod Saxena the chairman of Oxigen Services India, the subcontinent’s first fintech company to digitize cash.
India is home to 1.3 billion people, and two years ago 94% of all transactions took place in cash. The economy was in cash.
Over the last two years, Saxena says, there has been a push by the central government to deregulate and create a digital infrastructure for moving cash. India created one of the world’s largest databases for digital IDs — fueled by biometric signatures, not unique numbers — and allowed its residents to open bank accounts using this ID, without requiring paperwork. Since then, more than 600 million new bank accounts have been opened. And these bank accounts allow India’s residents to send money person-to-person.
“For people who weren’t connected to the system, now they are,” he says.
That’s just one success story, though digitization has yet to reach 100%.
And full adoption is the goal, says panel member David Block-Schachter, chief technology officer at the Massachusetts Bay Transit Authority (MTBA). Without it, the benefits of a cashless society will remain limited. From his perspective, transportation runs on a schedule. Fare payment systems, even those that support digital payments, that process cash will add time to trips. 10-15 seconds here or there may not sound significant, but any wasted time introduces inefficiency to a system that is meant to be free of it.
But how can we encourage cashless populations?
Education on its benefits is a good place to start. Because it is physical and carries little in the way of security, cash makes holders vulnerable to petty (or grand) theft. As paper, it also requires environmental investment to produce. Still, cash is an easy form of payment for many. The societies that have seen success in cashless have encourage digital adoption through incentive.
In Norway, says panelist Leif Trana, minister counsellor for economic and artic affairs at the Embassy of Norway, the shift has been gradual. As part of labor contracts, banks promise workers that if they no longer received payments in cash — but deposited it electronically — they would never charge them withdrawal fees. In addition, the federal government required citizens to open digital mailboxes for communication purposes. The government no longer sends any paper communications.
As for security concerns, those are real and more than a little scary. Consider a full move to digital: what if the electrical grid went out? What if the processing platforms went down? People would lose access to their money. And while part of this security risk can be addressed by creating redundant systems in the case of failure, there is still the challenge of personal information floating around the digital space.
In India, Saxena says, digital IDs require residents to disclose no personal information. All they need is their fingerprint or other biometric authentication — there no account number, no password. So the network is secure as long as the digital database is secure, he says.
“There hasn’t been a serious challenge yet,” he says. “Though that doesn’t mean there won’t be.”