A cashless society is one where goods and services are purchased via electronic means as opposed to cash and checks. Western nations are slowly but surely moving toward a cashless society. For example, the New York Times recently reported that banks and retail outlets are developing new payment systems using mobile phones to complement the already widespread usage of debit and credit cards.
One in ten Americans don't carry paper cash with them on a daily basis and according to Bankrate.com, 78% of Americans carry less than $50 on them at any one time. The situation is pretty much the same in Western Europe. In the UK, for example, a recent survey by the British Retail Consortium (BRC) found that debit cards are now used in 50% of retail sales. MasterCard also recently reported that in Belgium and France, only 7% and 8% of transactions respectively, are made in cash.
Africa appears to be moving in the same direction. Despite the relatively low penetration of the banking network in most parts of rural Africa, mobile money is leading the way to making Africa a cashless society.
We have covered the growth of mobile money in Africa
and analyzed the macroeconomic effect on the continent extensively in various articles on this site. If the uptake of mobile money continues at the same frenetic pace, Africa may catch up and even overtake other parts of the world in the drive to become cashless.
East Africa offers the best example of a society that is rapidly becoming cashless, thanks to widely acceptable mobile money. The average Kenyan, for example, can now buy groceries at a local kiosk, pay bus fare, pay house rent, top-up mobile phone airtime, pay a doctor's bill, buy a drink at a pub and much more - all using electronic funds loaded on the mobile phone.
Mobile wallets can be linked to a user's bank account in such a manner that one will never need paper money. Once the salary or business proceeds are credited to the bank account, the user only needs to withdraw whatever they need to their mobile wallet and make payments.
Growth of Banking
Many banks operating out of Africa are reporting super normal profit margins and abnormally high growth rates, an indication that despite a not-so-rosy past, banks are finally beginning to make significant headway. More people are becoming bank customers due to customer friendly banking policies. This has led to massive uptake of debit cards - moving the continent closer to cashless status.
RFID chip enabled Identity Cards
There is an initiative in Nigeria to issue all citizens with a multipurpose Biometric National Identity Smart Card. The card is to be issued by MasterCard and will enable all Nigerians to participate in the financial services system. While there has been criticism of the system, such concerns that the system is a threat to freedom, the project, if implemented fully, will make Nigeria a truly cashless society.
Cryptocurrencies such as Bitcoin are also contributing to making Africa a cashless society though they are yet to gain widespread popularity. There are several bitcoin companies operating out of Africa. We covered this extensively in an earlier article titled, Africa Getting on the
According to an old Swahili proverb, "the clouds are a sign of coming rain." While Africa is still a long way off from becoming a truly cashless society, all the signs indicate that the days of cash transactions are numbered as more and more buyers and sellers continue to embrace cashless and contact-less modes of payment.