by Niki Blois December 21, 2020

Last Updated: December 21, 2020

By the end of 2020, the global pandemic will have caused a 32% reduction in cash usage compared with ten years ago, prompting many to speculate about the possibility of moving to a fully cashless society.

Concerns about the COVID-19 virus have pushed consumers to use more digital payment methods instead of cash, and experts believe these digital habits will stick around even after the pandemic ends. So what would a cashless society look like? And what would it mean for merchants and businesses?

What is a cashless society?

While the concept seems simple enough, there are actually competing ideas of a cashless society. Some define it as 100% cashless—absolutely no paper money or coins in circulation, and digital as the only option. Others see a cashless society as mainly digital—about 95%—while still allowing for the existence and use of cash on rare occasions.

In either case, digital methods would be the primary mode of exchanging, processing, handling, and storing money.

Pros of a cashless society

1. Convenient

Digital payment methods are often more convenient than cash. Cashiers don’t have to make change, and customers don’t have to visit an ATM to withdraw cash. In some cases, customers can simply tap their phone or card and instantly transfer funds. Digital payments are also easier to record, which can help both consumers and businesses more accurately track the flow of money.

2. Fewer crimes

Because it’s hard to trace, cash is often used in illegal operations. Moving to a cashless society would therefore reduce certain crimes. For example, tax avoidance and money laundering would become much more difficult in a digital system, as digital payments are significantly easier to track than cash. Likewise, theft and robberies of cash would decrease, since very few people would carry cash on their person.

3. Less time and money spent on…money

Printing paper bills and coins costs money. In a cashless society, those costs would disappear. Similarly, the time and resources spent handling, storing, transferring, and depositing cash would be eliminated.

Cons of a cashless society

1. Data vulnerability

One big advantage of cash is its anonymity. You don’t need a pin number or billing address to use cash, and there’s no risk of exposing your personal data. Digital, on the other hand, is another story. We’ve all seen the news stories about major data breaches where millions of customer data points are exposed. In a cashless society, the majority of your money would be potentially vulnerable to breaches and attacks. If the worst happened and your account was totally drained, it would be difficult to replace those funds in a timely manner.

2. Loss of privacy

A fully digital economy would mean less privacy for consumers. Banks and other financial institutions would have more access to individuals’ purchasing history and cash flow, for example. This information could negatively impact the decisions these institutions make and might even lead to discrimination.

3. Inequality

Many experts believe that a cashless society would widen the already large gap between the rich and poor and penalize the most marginalized, including people of color. A significant number of Americans are considered unbanked, meaning they don’t have a credit card, debit card, or bank account. These people, often from lower economic backgrounds, use fringe services like check cashing to get by.

In a transition to a fully digital economy, these people could get left behind, as they might not have the resources necessary to participate in a cashless society—like a smartphone or bank account with an accredited bank.

Similarly, groups of people that may not want to adopt new technology, like the elderly, are at risk of being left behind in a cashless society.

What a cashless society means for merchants

1. Increased efficiency and insight

Managing cash requires a lot of busywork, from printing receipts to reconciling accounts to compiling reports. A fully digital system would reduce this paperwork and bring increased efficiency to businesses. In addition to speeding up checkout times, businesses would also be able to see their financial data and transactions in real time, giving them up-to-date insights and the ability to quickly and intelligently react to challenges and opportunities.

2. Increased security

As more businesses and consumers migrate to digital or cashless payment options, the burden falls on merchants to provide the highest level of security possible. Consumers trust businesses to keep their information safe, and in a fully cashless society, merchants would need to invest in security solutions and protocols that protect sensitive data.

3. Customer concerns

Choosing to abandon cash entirely may provoke negative publicity. If certain segments of your customer base feel strongly about using cash, or simply don’t have the option to go digital, you’ll lose those customers and could even face public backlash. Two popular restaurant chains, Shake Shack and Sweetgreen, experimented with going fully cashless but ultimately reversed this decision after it led to controversy.

However, every business is different. A fast casual restaurant chain may not be able to go fully cashless in today’s society, but if you believe your core customer base is willing to go digital, choosing a cashless business model may make perfect sense. In some cases, going cashless could even stimulate purchases, as digital methods are faster and more convenient.

4. New technology

In a cashless society, merchants would have to adopt the needed technology to accept digital payments. In light of the pandemic, many merchants have already made the shift to new digital payment methods: contactless payments, credit cards, mobile payments, virtual terminals, integrated payments, and more. While it may feel overwhelming to make the switch to digital at first, it’s crucial for businesses to stay flexible and grow to meet their customers’ needs. Merchants must continually invest in the technology needed to provide cashless payment methods.

5. Safe and easy payment methods

Overall, the shift to a cashless society represents a growing trend among consumers: they want safer and easier payment methods, and digital payments deliver on those requirements.


The pandemic may have accelerated the cashless boom, but the trend was growing even before COVID-19. As the business landscape continues to shift, it’s up to merchants to identify and respond to changing customer behavior in order to remain relevant, helpful, and competitive.

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