Cash vs. Cashless in Singapore: Which Is Best for You?
Cashless payments are becoming increasingly popular around the globe. However, that does not appear to be the case in Singapore. Even as the government remains confident of a cashless society by 2025, a number of sectors and demographics remain hesitant to embrace a cashless economy.
Cash and cheque payments account for about 40% of all transactions in the island nation, a surprise for a nation known to be on the forefront in the adoption of emerging trends. Cash in circulation in the country currently accounts for about 10% of the Gross Domestic. In contrast, cash in circulation in Sweden accounts for just 2% of the GDP.
Singapore lagging when it comes to cashless transaction could as well be attributed to the aging population. Security concerns is another reason why people prefer cash, given that mobile payment systems are always prone to attacks. Security concerns were up to 41% in 2018 compared to 34% as of 2017.
Amidst the tailwinds, there is no doubt that a transition to a cashless society will be a gradual one in Singapore. The younger generation are expected to spearhead the transition, given the benefits and convenience that comes with digital transactions. The availability of mobile payments such as NETSPay, DBS, PayLah, GrabPay, and Alipay is another catalyst that should fuel the transition.
Benefits of Going Cashless
The government is one of the forces spearheading the drive to a cashless society given the benefits at stake.
While Singapore is not known for high levels of crime, less cash in circulation could take crime levels involving cash to new lows. Cashless transactions would also lead to a reduction in illegal transactions, mostly related to crime or illegal drugs. Illegal transactions many at times take place in cash as actors try to avoid creating any trail.
Cashless transactions translate to more security for both vendors and customers compared to when one is walking around with hoards of cash.
Cashless transaction would go a long way in creating paper trails ideal for combating financial crimes. With cashless transactions, it will become increasingly difficult to hide income all in the effort of avoiding paying taxes. Money laundering should also become harder given the trail created between a sender and receiver.
The creation of paper trails will also make it easy for people to keep track of their spending patterns. This is especially beneficial for people who wish to cut back on unnecessary spending.
With cashless transactions, businesses will no longer have to worry about the costs for storing and transferring money from one point to another. Moving hoards of cash in protected vehicles should become a thing of the past, allowing businesses to focus on other important matters.
Boost on the Economy
A cashless society could have a positive impact on the economy on fuelling increased spending. Studies have shown that people are likely to avoid small purchases if they do not have cash on them. However, with cashless payment services, people are likely to spend more.
Disadvantages of a Cashless Society
Going cashless has its fair share of challenges and risks, seen as one of the reasons why the aging population in Singapore is reluctant to make the switch.
The risk of being hacked and an account getting wiped out, has also hurt Singapore’s desire for a cashless society. The consequences are even higher at a time when hackers appear to be sharpening their skills. Even if one stands a chance of being reimbursed in case of an attack, the inconvenience that comes with waiting for everything to be sorted could as well explain why most people are still using cash.
Cashless transactions translate to reduced levels of privacy given the paper trail created with each transaction. Cash transactions allow people to send and receive money without leaving behind any crucial data that can be used against them in future.
Concerns that glitches on technologies, powering cashless payment systems, could hit anytime has also had a hand on people shying away from digital payment services. The fact that merchants may not have a way to accept payments in times of glitches at times makes it impossible for people to complete valuable transactions.
Fees and Overspending Risks
Most mobile payment systems charge a fee on transactions completed. The fees can be extremely high, depending on transaction volumes. In contrast, one only needs to pay the actual price of a good or service with cash to avoid unnecessary fees.
Overspending is another risk associated with cashless payments. Rarely do people spend huge chunks of money without feeling the pinch, as is the case with cashless transactions.
World’s Most Cashless countries
Sweden is one of the countries where cashless transactions are becoming the norm as the country overtook the U.S in 2018. The country has taken a range of initiatives that continue to spur digital payments. The proliferation of mobile payment apps such as Swish, with more than 6.3 million users, continues to fuel the cashless society.
Canada and the U.S are also seeing an increase in cashless transactions thanks to internet and smartphone proliferation. The fact that the two populations are dominated by Millennials who don’t shy away from emerging technologies also underscores why cashless transactions are increasingly taking over. Mexico is another country seeing an uptick in digital transactions thanks to the rollout of a number of real-time payment systems.
The Future of Cash
The likelihood of cashless transactions becoming the norm around the world is slowly becoming a reality. Instead of using paper and coins to complete transactions, people are expected to authorize the transfer of funds using mobile devices.
Credit and debit cards are other alternatives poised to replace hard cash as well as electronic payment apps such as PayPal and Venmo. Mobile payment apps of the likes of Alipay, WeChat Pay, Apple Pay, and Google Pay also continue to gain traction, consequently fuelling cashless societies around the world.