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How Technology Is Driving Cashless Economies

July 25th, 2016

Cashless Transactions

The rise of mobile payments, digital currencies and fintech is smoothing the way towards genuine, workable cashless societies1. Sweden is leading the way in going cashless, followed by Denmark and other Nordic countries2 – to the point that using cash is a sign of something having gone wrong with the system. Last year, cash transactions constituted a mere 2% of Sweden’s total economic activity – and will account for a mere 0.5% by 20203.

There are several advantages to going cashless. Cashless wallets can’t be mugged. They are difficult to steal, or misplace. Cashless societies are also very well placed to combat money laundering and counterfeiting. Every transaction leaves a digital footprint, which means that grey money is noticed immediately, and the shadow economy is curtailed.

Going cashless is also good for economic growth. A recent Visa and Moody Analytics study showed that a rise in electronic payments in the UAE contributed a cumulative USD 3.7 billion to the country’s GDP between 2011 and 2015, while creating an average of 14,170 new jobs a year4. When a global perspective is taken, electronic payment transactions add USD 296 billion to global GDP while raising the consumption of goods and services by 0.18% a year and creating 2.6 million jobs on average per annum.

Xpress Money is busy linking Sweden’s cashless expertise with other parts of the world through its stong network. Through our partnership with Swedish firm Seamless, customers in Sweden are now able to send money to India, Nigeria and Thailand via SEQR (se•cure), Europe’s most popular mobile wallet. This alliance has also opened doors for Seamless to tap into the international money transfer market which was purely domestic in nature up until now. Beneficiaries can receive remittances in a number of ways, including delivery to a mobile wallet where possible. In Phase II, Xpress Money and SEQR digital transfers will be extended to Belgium and Finland.

Digital money transfers are convenient, safe and affordable. And excitingly, they also help bring down transfer fees as money transfer brands replace physical shops with digital channels. It’s worth remembering that reducing money transfer fees in the interest of global equality is a formal United Nations Sustainable Development Goal (SDG). The aim is to bring remittance fees down to the 3% mark by 20305, compared to the current global average of 7.4% of the remitted amount6.

Currently, Xpress Money’s global average cost of remittances stands at a low 2%, and initiatives such as our partnership with SEQR will further help our customers pay even less when transferring money.

 

References

1. https://www.financemagnates.com/fm-home/moving-towards-cashless-society/

2. https://www.theguardian.com/business/2016/jun/04/sweden-cashless-society-cards-phone-apps-leading-europe

3. https://usa.visa.com/dam/VCOM/download/visa-everywhere/global-impact/impact-of-electronic-payments-on-economic-growth.pdf

4. https://sustainabledevelopment.un.org/focussdgs.html

5. https://pubdocs.worldbank.org/en/661301460400427908/MigrationandDevelopmentBrief26.pdf